Canyon Edge - $WOR & $NKE Earnings, Competitive Landscapes

Welcome to the 5th edition of Canyon Edge - in this edition we talk about Worthington Enterprises’ and Nike’s upcoming earnings reports, take a look at what matters to $WOR stock, and what analysts look at what viewing a company’s competitive landscape.

Earnings Intelligence

$WOR | Tuesday June 24 – Q4 FY2025 Earnings 

Sell side Consensus Estimates (YoY):

Revenue: 301M (-5.45%)

EBITDA: 70M (+10.45%)

EPS (Adjusted): 0.84 (+14.05%)

Sentiment Check:

2 Strong Buys / 0 Buys / 1 Hold / 0 Sell / 1 Strong Sell

Not too many analysts, but sentiment around Worthington Enterprises is cautiously bullish right now. The industrials sector is 2025’s top performer so far, and investors are rotating into cheaply priced industrial names on hopes of imminent Fed cuts and the broader AI-driven capex boom. Goldman Sachs did downgrade the stock to “Sell” on construction headwinds and joint venture pressures, but most other analysts remain constructive, arguing that Worthington’s pivot to a higher-margin, less cyclical mix, setting them for a more durable earnings outlook.

What to look for coming into earnings:

Looking ahead to earnings, focus will be on management’s comments on how they view the recent acquisition of Elgen and how HVAC parts, ductwork and structural framing will help grow future business growth.

EPS will be a key metric to watch for Worthington Enterprises. A strong EPS beat, accompanied by improving margins in core operations, would be a promising sign, especially following the spin-off from Worthington Steel, which was intended to improve overall profitability. At this stage, a top-line beat will likely be less important, it’s all about performance at the bottom line.

Results from their joint ventures will also be critical. For WAVE, we’ll want to see if momentum is holding up. A major tailwind for this segment continues to be data center demand. Now for ClarkDietrich, keep an eye on whether there are signs of recovery in that segment, which took a hit last quarter.

Desk Color:

Canaccord Genuity: “The company’s management team has demonstrated confidence in their predominantly domestic manufacturing capabilities, which provide a competitive edge in a tariff-heavy landscape.”

$NKE | Thursday, June 26 – Q4 FY2025 Earnings

Sell-Side Consensus Estimates (YoY):

Revenue: $10.71B (–15.06%)

Net Income: 178M (-88.37%)

EPS (Adjusted): $0.12 (–88.57%)

Sentiment Check:

4 Strong Buys / 14 Buys / 20 Holds / 1 Sell / 1 Strong Sell

What to Watch This Quarter:

1. Revenue Breakdown & Channel Trends

Last quarter, revenue dropped 9%, with Nike Direct down 12% and Digital down 15%. This quarter, investors will be watching to see if things are starting to level out, especially in North America and China. Nike’s trying to show that the mix of full-price digital and a cleaner wholesale setup is beginning to work. However, if direct-to-consumer sales are still weak, that’s a red flag for brand strength and pricing power in current market conditions.

2. Margins, Inventory, and Promotions

Gross margin dropped to 41.5% last quarter, mostly from heavy markdowns, clearing out extra inventory, and shifts in where sales were coming from. This time around, investors want to see if margins have finally bottomed. Nike’s cut way back on promo days, so if inventory is cleaned up and newer, higher-margin stuff like the new Pegasus Premium is starting to take over, we could see margins start to rebound later this year.

3. China and Product Innovation Traction

China slowed down last quarter, even though Nike’s been pushing the whole “sport-led storytelling” angle. New performance products like the Pegasus Premium and Vomero 18 are starting to pick up, but not fast enough yet. Management is betting big on categories like running, basketball, and training to bring back growth. This quarter, they need to show those launches are actually catching on and scaling, not just doing okay in small pockets.

Desk Color:

Morgan Stanley: “We see room for 4Q25 EPS upside, but caution Street FY26 EPS as too high. This, & the lack of positive demand/innovation feedback from the channel, leaves us slightly more negative on our Equal-weight rating. But, seemingly bearish sentiment may mean any bright spots are rewarded. Trim PT to $61.” 

Invest like a PM - What Really Matters This Quarter for Nike

Nike’s in a tough spot. The stock’s down around 20% this year, and heading into Q4, there’s not a lot of confidence. They beat last quarter, but both revenue and EPS are still expected to drop again. At this point, it’s less about beating numbers and more about proving their turnaround is real.

The “Win Now” strategy is all about FY26 being the bounce-back year, with new performance products and a better mix between Nike Direct and wholesale. If they can show progress on that and get people to believe the recovery’s actually coming, the stock might finally find its floor.

Think Like a PM:

This all comes down to execution and timing. Does Nike still have the brand power to compete in a market that’s getting more crowded and price-sensitive? If they show progress and better margins, DTC starting to stabilize, and real traction in the new performance stuff, then investors will hang on. But if that doesn’t show up, FY26 starts looking less like a comeback and more like a moving target.

Positioning & Risk/Reward heading into it:

A lot of big funds have pulled back from Nike over the last couple quarters, it’s not the favorite it used to be. But because expectations are so low now, the setup’s actually kind of interesting. If management shows any signs that margins are stabilizing, inventory’s in a good spot, or that the new performance lines are gaining traction, the stock could pop. But if they miss again or keep things vague, money’s probably going to keep rotating into names like On, Adidas, or even safer plays like Costco or Deckers.

The Bottom Line:

Q4’s a credibility check for Nike. They don’t need to crush it. Instead, they just need to show the strategy’s working and margins are starting to hold. The stock’s already near multi-year lows, and a lot of funds have already stepped back. So if there’s any real sign of progress, it could bounce fast. But if the message is weak or unclear, the road to FY26 is gonna start feeling a lot longer.

Analyst Mode

How the Buy-Side Tracks the Competitive Landscape

Even if you hit your numbers, if a competitor does better, the market punishes you. It’s all about who’s winning in the sector. Here’s how that plays out with a real example.

Case Study: Target (TGT) vs. Walmart (WMT)

Target’s Q1 2025 (ended May 3, 2025) was a mess. Sales dropped 2.8 percent to $23.8 billion, with comp sales down 3.8 percent—stores fell 5.7 percent, though digital sales inched up 4.7 percent. Adjusted EPS was $1.30, below the $1.61 Wall Street expected, though GAAP EPS hit $2.27 due to a $0.97 one-time gain from a lawsuit settlement. Foot traffic was down 2.4 percent, and people spent 1.4 percent less per visit. Gross margins took a hit, dropping 60 basis points to 28.2 percent because of markdowns and higher online fulfillment costs. The stock fell over 5 percent after the report, with X posts calling out Target’s inventory problems and some noise around DEI pushback.

Walmart, meanwhile, had a strong Q1 2025 (ended April 30, 2025). Revenue grew 6 percent to $161.5 billion, beating estimates by $2.1 billion. U.S. comp sales were up 4.5 percent, e-commerce jumped 22 percent, and adjusted EPS of $0.61 beat forecasts by $0.03. Margins held steady, and Walmart’s grip on groceries and online sales kept stores packed. X posts pointed to their supply chain strength and better handling of inflation compared to Target.

The difference is clear. Target’s losing ground in areas like home decor where shoppers are cutting back, while Walmart’s grocery dominance and e-commerce growth are pulling in customers. Target’s inventory was up 8 percent in some reports, while Walmart’s running a tighter ship. When one company’s margins are shrinking and the other’s are holding or growing, the market picks a winner—Walmart.

How the Buy-Side Looks at Competition

Hedge funds and big investors use specific ways to size up the competitive landscape. Here’s what they focus on, with real data sources:

Who’s Gaining Market Share?

Tools like Numerator and IRI track what people are buying. In 2024, Walmart’s grocery share was 26 percent, per Numerator, while Target’s stayed flat at 8 percent.

X posts often share early clues, like Placer.ai data showing Walmart’s store traffic beating Target’s by 12 percent in Q1 2025.

Are Margins Better Than Competitors?

Margins show who’s got pricing power and efficiency. Target’s Q1 2025 margin drop to 28.2 percent compared to Walmart’s steady margins shows who’s managing costs better.

Analysts get this from earnings calls, SEC filings, and Bloomberg’s supply chain data.

Is Growth Outpacing the Sector?

They compare revenue and unit growth to rivals. Walmart’s 22 percent e-commerce growth in Q1 2025 blows past Target’s 4.7 percent digital gain.

Funds use web-scraped data, like Thinknum for pricing trends, and X posts to gauge who’s got momentum.

What’s the Market Not Seeing?

The buy-side looks for gaps between what people think and what’s real. X posts in April 2025 flagged Target’s inventory and tariff risks before its Q1 miss, while Walmart’s tight operations got praise. Funds shorting Target and going long Walmart made money.

Q2 2025 Outlook (Speculative)

Target’s Q2 2025 earnings haven’t happened yet, but here’s what the buy-side’s watching based on guidance and sentiment:

Target expects a low single-digit sales drop for 2025, with Q2 comps likely flat to down 2 percent. X posts show analysts are worried about tariffs and weak spending on non-essentials. EPS is pegged at $2.03, but more markdowns could pull it lower.

Walmart’s guidance (3.75-4.75 percent sales growth) signals confidence in Q2, fueled by e-commerce and groceries. The buy-side thinks Walmart’s pulling further ahead.

The Bottom Line

The buy-side doesn’t care about a company’s “story” unless it’s beating its rivals. They compare companies head-to-head using earnings, filings, data like Numerator, and X posts for real-time signals. Target’s Q1 2025 showed it’s struggling on margins and share, while Walmart’s killing it.

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