Nike (NYSE:NKE) reports third-quarter results March 24 after the close of trading. They’re expected to be mediocre, which isn’t great news for those holding Nike stock.

Are there any reasons to be cautiously optimistic, or has the coronavirus ratcheted down expectations for this quarter and well into the future? Whatever the results are, I believe Nike remains a good stock to own for the long term. Any weakness from earnings and guidance should provide a buying opportunity. 

However, as we are learning, this is not a static situation. It’s changing rapidly, in ways that are bad (Italy) and good (China), making it really hard for investors to take the plunge. That’s understandable. 

At the end of the day, the world is always going to want Nike footwear and apparel. Maybe not right now, but certainly in the future. 

What Are the Numbers?

The Zacks Consensus Estimate for the fourth quarter is for revenue of $10.01 billion, 4.1% higher than a year earlier, with earnings per share of 62 cents, 8.8% lower than in Q3 2019. More importantly, Nike’s earnings have been revised lower by 9.3% within the last 30 days. That’s a direct result of the coronavirus.

According to the analysts providing revenue and earnings estimates for fiscal 2020, revenue is expected to be $41.22 billion, 5.4% higher than in fiscal 2019. As for earnings, the average is $2.79, 12% higher than a year earlier. Looking forward to 2021, the analysts expect earnings of $3.28 a share on $45.11 billion in sales. 

All of these numbers could change quite a bit between now and the end of the summer. It really depends on how fast China gets back on its feet and how North America handles the virus. 

Cowen analyst John Kernan believes that Nike’s sales will decline by 34% in the fourth quarter due to store closures, supply chain issues, and a lack of athletes promoting the brand. 

“Mall traffic may cease in coming weeks and fixed costs and future inventory markdowns create an almost impossible modeling exercise globally,” Kernan said in a recent note to clients. 

When you consider that the current analyst estimate for the fourth quarter is a profit of 64 cents, a four-cent loss would be a major kick in the teeth for Nike stock. Down 38% year to date, it seems likely that its stock will see further declines in the next few months. 

Barring positive guidance on March 24 along with an informative conference call, analyst revisions such as Kernan’s are likely to become the norm in the next couple of weeks.

Nike’s Leadership Will Be Busy

In February, CEO John Donahoe announced several senior leadership changes as a result of retiring executives at the company. 

Heidi O’Neill is taking over as President of its Consumer and Marketplace division on April 1, replacing Elliott Hill, who is retiring. Also retiring is COO Eric Sprunk. He will be replaced by Andy Campion, the company’s current CFO. The company’s current CFO of Operating Segments and Vice President of Investor Relations, Matthew Friend, will become CFO.

The deck chairs are changing at a challenging time for the business. How the C-Suite handles these difficulties will go a long way to how quickly its stock recovers later in 2020. 

If you currently own Nike stock, it’s a testament to the company’s deep bench that it’s able to plug in quality people to provide a seamless transition. Companies that practice strong succession planning generally tend to have stocks that outperform their peers. 

Despite Nike’s performance year to date, over the past 10 years, it has generated a total return of 15.3%, 570 basis points higher than the U.S. markets as a whole and 134 basis points clear of its footwear and accessories peers. 

The Bottom Line on Nike Stock

My InvestorPlace colleague, Luke Lango, recently recommended investors buy Nike on coronavirus weakness. His rationale: consumers are currently buying consumer staples at the expense of consumer discretionary expenses. 

That’s a delicate way of stating that running shoes aren’t on anybody’s priority list, and even if they were, most of the stores selling Nike products are currently closed. Sure, online sales will happen, but not nearly to the extent that they would under normal circumstances. 

As the Cowen analyst said, it’s pretty hard to do financial modeling when you have no idea where this whole crisis is headed.

I’m with Luke. This too shall pass. 

With Nike stock down more than 35% in 2020, I would consider implementing a dollar-cost averaging program for buying NKE stock. Every week it’s down by more than 2-3%, buy 10-20 shares. If you use a commission-free broker, you ought to be fine.   

Of course, you shouldn’t be buying if you’re not prepared to hold Nike stock for the long haul, because the volatility is not going away anytime soon.

For me, Nike’s a buy. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.