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Takeaway: We think that the most significant factor that has been impacting $NKE's valuation and sentiment will turn on the margin this quarter.

Nike’s stock price is all about growth in Futures, right? We’d argue that the answer is ‘Not Necessarily’, and in this instance, we think Gross Margin matters much more.

Clearly, futures matter. We’d be foolish to suggest otherwise. Chart 1 shows the stock against the change in Global Futures. Not bad. Until recently, that is.

NKE: Fundamentals Turning Now - nk1

Chart 2. Once Nike’s Gross margin started to break down, the importance of futures was taken down a notch. It was ‘all about inventories and margins.’

NKE: Fundamentals Turning Now - nke22

Chart 3. Inventories, however, have turned a corner, and are again converging with Gross Margins. The company has nudged that perhaps they are up towards the back half. But we think they could be positive in the coming quarter.

NKE: Fundamentals Turning Now - nke3

For a stock that is so universally hated right now (note worst sell-side Buy Ratio in a decade), we’ve gotta think that it can only be a positive for the stock if we’re right that this factor is turning. (Chart 4)

NKE: Fundamentals Turning Now - nke4