One company is expected to grow earnings. The other, not so much.
It’s all because of that Run-D.M.C. song.
PE is only part of the picture! Even discounted cash flow models mean little if the inputs are just guesses. Look at company outlook and market sentiment!
Nike, for instance, has had inventory issues and consumer demand has been low. Earnings have been slipping, and they just got a new CEO. If you’re into value investing, Nike might be worth a look, as it has a bit of a moat in the industry.
@Oli
Right, PE isn’t everything. I was just surprised by the big difference. Anyway, I’m considering buying Nike—I think it’s undervalued and might go up once people start spending more again.
OP, the market expects Adidas to grow earnings faster than Nike.
I don’t follow this industry closely, but here’s why Nike might be the better buy:
- Nike’s earnings per share are 5x more than Adidas.
- Nike’s dividend yield is about 4x that of Adidas.
- Nike’s current price is still about 15% below its 1-year target price, while Adidas has already passed its target price by 10%.
Honestly, I feel like PE is kind of a useless metric these days.