Though the market has enjoyed a great stretch over the last year or so, not all have joined the party, a list that includes popular names such as Advanced Micro Devices AMD and Nike NKE.
Both have underperformed in a big way over the past year, as shown below.
Image Source: Zacks Investment Research
It raises a valid question: are these beaten-down stocks worth investors’ attention? Let’s take a closer look at how each stacks up.
NIKE Looks to Shake Off Woes
NIKE shares faced pressure following the release of its latest quarterly results, with commentary not all that soothing either. Concerning headline figures in the release, EPS fell 25% year-over-year alongside an 8% decline in sales.
The performance on headline numbers jumps out, with the company’s top line primarily remaining stagnant and showing little growth over recent years. Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
"We're taking immediate action to reposition our business, so we can get back to driving long-term shareholder value. Our team is ready to go, and I'm confident you will see more moments of NIKE being NIKE again," said CEO Elliott Hill.
Analysts downwardly revised their earnings expectations across the board following the release, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell). The negative outlook here isn’t supportive of bullish price action, and investors would likely be better off waiting for a positive shift in the EPS outlook.
Image Source: Zacks Investment Research
AI Keeps AMD Outlook Strong
AMD shares have been a frustrating hold over the past year amid the runs we’ve seen in other semiconductor/AI names, with the stock seemingly yet to benefit. Nonetheless, quarterly results have largely been positive, posting 31% EPS growth on the back of 17% higher sales in its latest print.
Notably, Data Center revenue of $3.5 billion reflected a quarterly record and climbed an astonishing 122% from the same period last year. Overall, the Data Center results confirm strong underlying demand for AI, a trend we’ve been very accustomed to over recent periods.
AMD’s data center results have regularly exceeded our consensus expectations in recent quarters, as we can see below.
Image Source: Zacks Investment Research
The earnings outlook here for AMD has been primarily stable over recent months, though modest downward revisions have hit the tape alongside positive revisions as well. While analysts haven’t gotten visibly bullish, the stability of the overall estimate revisions trends can be seen as a solid takeaway.
Image Source: Zacks Investment Research
Bottom Line
Both stocks above – Advanced Micro Devices AMD and Nike NKE – have faced turbulence over the last year, widely underperforming relative to peers and the broader market.
Though both stocks have been beaten down, the negative earnings outlook for NKE suggests further near-term weakness, with investors likely better off staying away until the outlook brightens. Concerning AMD, the Data Center momentum is certainly attractive, with shares seemingly yet to fully benefit from the AI frenzy. The EPS outlook for AMD has also largely remained stable, a key factor.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
