Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for the “Madison Large Cap Fund”. A copy of the letter can be downloaded here. In the fourth quarter, the S&P 500 returned 2.65%, resulting in a full-year return of 17.9% for 2025. Over the last three years, the Index has achieved annual growth of over 21%. Following the recent trends, market leadership was defined by High Beta and Momentum factors, with narrow participation. However, in the fourth quarter, the mark ...

Core Insights - Nike's Q4 CY2025 revenue reached $12.43 billion, exceeding forecasts despite flat sales year-over-year, indicating a "beat-without-growth" trend in the footwear market as demand declines and classic styles lose traction [1][8] - The company faces significant challenges in China, where weaker demand and tariff-related cost pressures are impacting profitability and share price, leading to a lower stock valuation [2][5] - Current trading price of Nike shares is $57.34, reflecting a 24.22% decline year-to-date and a 25.3% drop over the past 52 weeks, positioning the stock in "dip" territory for investors focused on 2026 [5] Financial Performance - Nike's market value is approximately $84.6 billion, with a forward annual dividend of $1.64 per share, translating to a cash yield of about 2.79% for shareholders [4] - The recent earnings report for the quarter ending November 2025 showed an EPS of $0.53, surpassing the $0.37 estimate by $0.16, resulting in a 43.24% positive surprise, indicating strong execution despite external pressures [7] - Q4 CY2025 revenue of $12.43 billion was a 1.7% beat against the consensus of $12.22 billion, although sales remained flat year-over-year, highlighting a cooling growth trend [8] Market Valuation - Nike's stock trades at a forward P/E of 36.75x, significantly higher than the sector median of 19.90x, suggesting that the market still assigns a premium to Nike's earnings potential and growth prospects despite recent declines [6]

Core Insights - Nike Inc. is a global leader in athletic footwear, apparel, and equipment, facing competition from brands like Adidas and Under Armour, with a strong presence in North America but challenges in Greater China and Latin America [1] Financial Performance - Nike reported earnings per share (EPS) of $0.53 for the quarter ending December 18, 2025, surpassing the estimated $0.37, marking an earnings surprise of 43.24%, although this is a decrease from $0.78 in the same quarter last year [2][6] - The company's revenue for the quarter was $12.43 billion, exceeding the Zacks Consensus Estimate by 2.35% and showing a slight increase from $12.35 billion reported in the same period last year [3][6] Profitability and Margins - Despite the positive earnings report, Nike's profit margins have decreased, raising investor concerns about future performance [4] Strategic Positioning - Nike's management described their recovery strategy as being "in the middle innings," indicating ongoing progress in their turnaround plan, with second-quarter sales growth primarily driven by the North American market [4] Financial Metrics - Nike has a price-to-earnings (P/E) ratio of approximately 38.43, a price-to-sales ratio of about 2.09, and an enterprise value to sales ratio of around 2.17, indicating investor willingness to pay for earnings [5] - The company has a debt-to-equity ratio of 0.82 and a current ratio of 2.19, demonstrating strong liquidity and a balanced approach to financing its assets [5][6]

Core Insights - Nike Inc is expected to report a significant decline in earnings per share (EPS) of 52.6% and a slight revenue decrease of 1.7% for the fiscal second quarter [1][6] - The company is experiencing growth in North America and the EMEA regions, driven by wholesale gains, pricing discipline, and effective inventory management [2][6] - Challenges in the Chinese market, higher tariffs, and margin strain are testing Nike's "Win Now" turnaround strategy [2][3][6] Financial Metrics - Nike's price-to-earnings (P/E) ratio is approximately 34.23, indicating a strong investor willingness to pay for earnings [5] - The price-to-sales ratio stands at about 2.14, while the enterprise value to sales ratio is around 2.22, reflecting the company's valuation relative to its sales and cash flow [5] Market Performance - The stock has declined approximately 10% in 2025, with investors remaining cautious due to previous warnings about weak holiday sales [3] - Historically, Nike's stock has shown resilience, rising after its last two earnings reports and breaking a six-quarter losing streak in June, with an average next-day movement of 9.1% [4]

Core Viewpoint - Nike is preparing to report its second-quarter fiscal 2026 earnings amid ongoing efforts to revive growth and streamline operations, although stock performance has been under pressure due to cautious investor sentiment [1][2]. Group 1: Earnings Report Expectations - The earnings report is scheduled for December 18, 2023, and is particularly relevant for short-term traders given Nike's history of stock performance post-earnings announcements [1][3]. - Management has guided for Q2 revenue to decline in the low single digits, with a modest 1% benefit from foreign exchange, indicating a conservative outlook [6]. Group 2: Market Conditions and Stock Performance - Nike shares have underperformed broader equity markets, down 11% year to date, with challenging demand conditions in key regions like North America and China [2]. - Despite the stock's weakness, Nike has seen shares rise following earnings announcements in three of the past four quarters, suggesting conservative expectations may be set [3]. Group 3: Options Market Sentiment - The options market indicates that investors expect a notable move in Nike stock post-earnings, with an implied move of about 7.4%, higher than the average of 6.8% over the past four quarters, reflecting elevated uncertainty [4]. Group 4: Strategic Initiatives - Nike's wholesale business is showing improving momentum due to strategic efforts to broaden distribution and reach new consumer segments, which may help offset overall softness in revenue [6].

Core Insights - RB Global (NYSE:RBA) reported Q3 CY2025 revenue of $1.09 billion, reflecting an 11.3% year-on-year growth, surpassing analyst estimates by 3.4% [1][8][9] - The company's non-GAAP profit was $0.93 per share, exceeding consensus estimates by 17.3% [1][8] - Market capitalization stands at $18.12 billion [8] Company Overview - RB Global, rebranded in 2023, connects buyers and sellers of commercial assets, vehicles, and equipment across various industries [3] Revenue Growth - Over the past 12 months, RB Global generated $4.53 billion in revenue, indicating it is a mid-sized business services company [5] - The company has achieved a compounded annual growth rate of 27.8% in sales over the last five years, demonstrating strong demand compared to peers [6] - Recent annualized revenue growth of 21.2% over the last two years is below the five-year trend but still indicates healthy demand [7] Financial Performance - Adjusted EBITDA for the quarter was $327.7 million, with a margin of 30%, beating analyst expectations by 8.2% [8] - Operating margin decreased to 14.5% from 15.6% year-on-year, while free cash flow margin also declined to 17.3% from 23.2% [8] - Analysts project a revenue growth of 2.4% over the next 12 months, indicating potential demand headwinds [9]

Company Overview - Nike, Inc. is a leading American sports clothing company that designs, manufactures, and sells athletic apparel, footwear, accessories, and equipment [1]. Global Presence - Nike has a significant global presence, recognized by its iconic swoosh logo and strong brand identity [1].