Nike
NKE
$44.39
-1.42%
Nike, Inc. is the world's largest athletic footwear and apparel brand, operating in the consumer cyclical sector with a core business spanning performance and lifestyle products under the Nike, Jordan, and Converse brands. The company is a dominant market leader and global brand icon, distinguished by its massive scale, extensive wholesale and direct-to-consumer distribution network, and outsourced manufacturing model. The current investor narrative is intensely focused on a challenging turnaround story, as recent headlines highlight deep operational struggles, a sharp expected revenue decline in China, and eroding market share to competitors, testing investor patience regarding the timeline and viability of a recovery.…
NKE
Nike
$44.39
Related headlines
Investment Opinion: Should I buy NKE Today?
Rating: Hold. The core thesis is that Nike is a high-risk turnaround story where significant fundamental deterioration currently outweighs the appeal of a historically low valuation, warranting a cautious stance until clearer signs of stabilization emerge.
Supporting evidence includes a forward PE of 23.95x based on analyst EPS expectations of $4.25, which implies an earnings recovery that is not yet visible in recent results (Q3 EPS of $0.35). Revenue growth is stagnant at 0.09% YoY, and profitability is collapsing, with the operating margin more than halving year-over-year. The stock trades just 6.2% above its 52-week low, indicating deep pessimism is priced in, but the lack of positive momentum (-31.29% over 3 months) suggests no catalyst for a near-term rebound.
The thesis would upgrade to a Buy if the company demonstrates sequential gross margin improvement above 42% and provides guidance that stabilizes the China revenue outlook. It would downgrade to a Sell if revenue turns negative YoY or if the operating margin falls below 4%. Relative to its own history, the stock is undervalued, but relative to its current deteriorating fundamentals, it appears fairly valued to slightly overvalued, as the market is still pricing in a recovery that is far from certain.
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NKE 12-Month Price Forecast
The outlook is clouded with high uncertainty. While the stock's dramatic decline prices in significant bad news, the fundamental deterioration—particularly the halving of the operating margin—is too severe to ignore. The base case of a slow, grinding recovery is most probable, but the wide dispersion of potential outcomes warrants a neutral stance. Confidence is medium because the key variable—the success of the operational turnaround—is unproven and will take multiple quarters to assess. The stance would upgrade to bullish on evidence of margin stabilization for two consecutive quarters; it would turn bearish if revenue growth turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Nike's 12-month outlook, with a consensus price target around $57.71 and implied upside of +30.0% versus the current price.
Average Target
$57.71
14 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
14
covering this stock
Price Range
$36 - $58
Analyst target range
Analyst coverage for Nike is substantial, with 14 firms providing estimates. The consensus sentiment appears mixed but leans cautious, as evidenced by recent institutional ratings which include actions like 'Market Perform', 'Hold', and 'Neutral', alongside some 'Buy' or 'Overweight' ratings. Specific consensus recommendation and average target price data are not provided in the inputs, so the implied upside or downside cannot be calculated. The estimated EPS range for the forward period is $4.13 to $4.49, with an average of $4.25, while estimated revenue averages $58.27 billion. The wide target price range is not specified in the data, but the dispersion in EPS estimates signals moderate uncertainty about the earnings recovery path. Recent rating actions show a pattern of reaffirmation rather than major shifts, with Barclays upgrading from 'Equal Weight' to 'Overweight' in March 2026 and Needham downgrading from 'Buy' to 'Hold' in January 2026. This pattern suggests analysts are watching for clearer signs of a turnaround before making more decisive calls, and the lack of a unified bullish stance reflects the high uncertainty surrounding Nike's near-term prospects.
Bulls vs Bears: NKE Investment Factors
The evidence currently leans bearish, as the company-specific deterioration in revenue growth and profitability is severe, tangible, and accelerating, outweighing the stock's attractive valuation compression. The most important tension in the investment debate is the timeline and viability of Nike's turnaround against the backdrop of intense competitive pressure and a deteriorating financial profile. Bulls must see concrete evidence of margin stabilization and a return to sustainable revenue growth, particularly in China, to validate the current forward earnings expectations. Until then, the bear case of a 'value trap'—where a cheap stock gets cheaper due to worsening fundamentals—holds more weight.
Bullish
- Valuation Near Historical Lows: The stock trades at $44.69, just 6.2% above its 52-week low of $42.09 and 44.3% below its 52-week high, placing it in deep value territory. The forward PE of 23.95x is a significant compression from its recent peak of 106x in Q4 FY2025, suggesting much of the pessimism is priced in.
- Strong Balance Sheet & ROE: Nike maintains a healthy current ratio of 2.21 and a manageable debt-to-equity ratio of 0.83, providing financial flexibility for its turnaround. Despite recent pressure, the return on equity remains solid at 24.36%, indicating the core business model can still generate strong returns on shareholder capital.
- Analyst EPS Expectations for Recovery: Analysts project forward EPS to average $4.25, representing a significant recovery from the recent quarterly EPS of $0.35. This implies a forward PE of 23.95x, which suggests the market is expecting a meaningful earnings rebound over the next 12 months.
- Dominant Global Brand & Scale: As the world's largest athletic brand with a massive global distribution network, Nike possesses unparalleled scale and brand equity. This provides a durable competitive moat and a substantial base from which to execute a recovery, even as market share faces near-term pressure.
Bearish
- Severe Revenue & Profitability Deterioration: Q3 FY2026 revenue grew a mere 0.09% YoY to $11.279B, following a sequential decline from Q2. More alarmingly, net income fell sharply to $520M from $792M the prior quarter, with the operating margin collapsing to 4.90% from 10.40% a year ago, signaling deep operational distress.
- Accelerating Negative Momentum & Underperformance: The stock is down 31.29% over the past 3 months and 15.65% over the past month, starkly underperforming the S&P 500's gains of 3.59% and 8.7% over the same periods. This severe relative weakness, with a 1-year price change of -23.58%, indicates the sell-off is driven by company-specific, not macro, factors.
- China Headwind & Competitive Erosion: Recent news highlights a sharp expected revenue decline in China, a critical growth market, and eroding market share to competitors like On Holdings. This challenges the core turnaround narrative and suggests structural competitive threats are materializing.
- Premium Valuation Despite Weak Fundamentals: With a trailing PE of 27.95x, Nike trades at a premium to the typical consumer cyclical sector despite near-zero growth and contracting margins. This valuation disconnect creates significant risk of further multiple compression if the earnings recovery fails to materialize as expected.
NKE Technical Analysis
The stock is entrenched in a severe and sustained downtrend, with a 1-year price change of -23.58% and a 6-month decline of -35.34%, positioning it near the lows of its 52-week range. Trading at $44.69, the price is just 6.2% above its 52-week low of $42.09 and 44.3% below its 52-week high of $80.17, indicating the stock is in deep value territory but also signaling significant fundamental distress and a lack of positive momentum. Recent momentum has been overwhelmingly negative and accelerating, with the stock down -15.65% over the past month and -31.29% over the past three months, a stark divergence from the S&P 500's gains of 8.7% and 3.59% over the same periods, respectively, highlighting severe relative weakness. This sharp underperformance suggests the sell-off is driven by company-specific deterioration rather than broad market factors. Key technical support is firmly established at the 52-week low of $42.09, while resistance sits far above near the 52-week high of $80.17. A breakdown below the $42 support level would signal a new leg down and potential capitulation, whereas any meaningful recovery would require a sustained move above the recent breakdown level near $52. The stock's beta of 1.319 indicates it is approximately 32% more volatile than the broader market, which, combined with a max drawdown of -46.21%, underscores the elevated risk profile and significant downside experienced by holders.
Beta
1.32
1.32x market volatility
Max Drawdown
-46.2%
Largest decline past year
52-Week Range
$42-$80
Price range past year
Annual Return
-22.9%
Cumulative gain past year
| Period | NKE Return | S&P 500 |
|---|---|---|
| 1m | -13.4% | +12.6% |
| 3m | -29.1% | +2.5% |
| 6m | -31.3% | +4.3% |
| 1y | -22.9% | +28.4% |
| ytd | -29.9% | +4.3% |
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NKE Fundamental Analysis
Nike's revenue trajectory is stagnating and showing signs of decline, with the most recent Q3 FY2026 revenue of $11.279 billion representing a mere 0.09% year-over-year growth. This follows a sequential decline from Q2 revenue of $12.427 billion, indicating significant top-line pressure. The product mix shows Footwear, representing about two-thirds of sales, generated $7.914 billion in the quarter, while Apparel contributed $4.476 billion, but the overall flat growth suggests weakness across categories. Profitability is under severe strain, with net income for Q3 FY2026 at $520 million, down sharply from $792 million in the prior quarter, and a gross margin of 40.16%, a contraction from 42.75% in the year-ago Q3. The operating margin of 4.90% in the latest quarter is less than half the 10.40% from Q3 FY2025, reflecting significant compression. While the company remains profitable, the drastic margin erosion points to intense competitive and pricing pressures. The balance sheet remains relatively healthy with a strong current ratio of 2.21 and a manageable debt-to-equity ratio of 0.83. However, free cash flow generation is a concern; while the trailing twelve-month FCF is $2.475 billion, the latest quarterly operating cash flow was only $579 million in Q2 FY2026, down from $1.792 billion in Q3 FY2025. The return on equity of 24.36% remains solid but is likely under pressure given the declining net income, indicating the company's ability to generate returns from shareholder equity is being tested.
Quarterly Revenue
$11.3B
2026-02
Revenue YoY Growth
+0.00%
YoY Comparison
Gross Margin
+0.40%
Latest Quarter
Free Cash Flow
$2.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NKE Overvalued?
Given Nike's positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE ratio stands at 27.95x, while the forward PE is 23.95x, indicating the market expects some earnings recovery, though the modest gap suggests expectations remain tempered. Compared to sector averages, Nike's trailing PE of 27.95x is at a premium to the typical consumer cyclical sector, though a precise industry average is not provided in the data. This premium, if it exists, is currently unjustified by the company's near-zero revenue growth and contracting margins, implying the multiple may need to compress further if fundamentals do not improve. Historically, the stock's own valuation has compressed dramatically from its recent peaks; the current trailing PE of 27.95x is below the 44.21x recorded at the end of Q3 FY2026 (Feb 2026) and far below the 106x seen in Q4 FY2025. This places the stock near the lower end of its own historical PE band over the past two years, suggesting the market has already priced in significant pessimism. However, trading near historical lows can indicate either a value opportunity or a fundamental deterioration that warrants the lower multiple, with the latter seeming more aligned with current financial trends.
PE
27.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 24x~106x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
20.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are acute and center on severe margin compression and stagnating growth. The operating margin collapsed to 4.90% in Q3 FY2026 from 10.40% a year ago, a more than 50% decline, indicating intense pricing pressure and/or rising costs. Revenue growth has effectively stalled at 0.09% YoY, and the company faces a specific, forecasted sharp decline in China, a key market. While the balance sheet is strong, the drastic fall in quarterly operating cash flow to $579M in Q2 FY2026 from $1.792B a year prior raises concerns about the sustainability of free cash flow generation, which is critical for funding dividends and buybacks.
Market & Competitive Risks are heightened by Nike's valuation premium and loss of momentum. Trading at a trailing PE of 27.95x, likely above sector averages, the stock is vulnerable to multiple compression if growth does not re-accelerate. Competitors like On Holdings are explicitly cited as taking market share, challenging Nike's long-held dominance. The stock's beta of 1.319 indicates it is 32% more volatile than the market, amplifying downside moves during sector rotations away from struggling consumer names. Recent news consistently frames the story as a high-patience, multi-year turnaround, testing investor sentiment.
The Worst-Case Scenario involves a failure of the turnaround strategy, leading to consecutive quarters of revenue declines and further margin erosion. This could trigger a wave of analyst downgrades and a loss of confidence in the brand's pricing power, causing the PE multiple to re-rate toward distressed levels. A realistic downside could see the stock break below its key technical support at the 52-week low of $42.09, potentially testing levels last seen during major market crises. From the current price of $44.69, this implies a potential loss of approximately 6-10% to the immediate support, with a more severe scenario, aligned with the stock's max drawdown of -46.21%, suggesting a theoretical downside to the low-$30s if fundamentals worsen significantly.
FAQ
The key risks are, in order of severity: 1) Operational: Continued margin compression, with the operating margin already halved to 4.90% YoY, threatening profitability. 2) Competitive: Erosion of market share in core categories to rivals like On Holdings, as highlighted in recent news. 3) Geographic: A sharp, forecasted revenue decline in the critical China market. 4) Financial: The stock's high beta of 1.319 means it is 32% more volatile than the market, amplifying losses during downturns. These risks collectively challenge the turnaround timeline.
The 12-month forecast is bifurcated, with a 55% probability base case target of $48-$58, assuming a slow recovery and EPS meeting the $4.25 consensus. The bullish case (25% probability) targets $65-$75 on a successful turnaround and margin recovery. The bearish case (20% probability) sees a drop to $38-$42 if fundamentals worsen. The most likely scenario is the base case, predicated on the assumption that Nike stabilizes its business but struggles to return to its former growth and margin profile in the near term.
NKE's valuation presents a paradox. Relative to its own history, with a trailing PE of 27.95x far below its peak of 106x, it appears undervalued. However, relative to its current near-zero revenue growth and collapsing margins, the valuation remains at a premium to the broader consumer cyclical sector. The forward PE of 23.95x implies the market is paying for a significant earnings recovery (to ~$4.25 EPS). Therefore, the stock is fairly valued to slightly overvalued based on present fundamentals, but could be undervalued if the anticipated recovery materializes.
NKE is a speculative buy only for investors with a high risk tolerance and a long-term horizon. The stock offers potential upside if its multi-year turnaround succeeds, as it trades near 52-week lows with a forward PE of 23.95x. However, it carries substantial risk, evidenced by a 31.29% decline over three months and a severe contraction in operating margin to 4.90%. It is not a good buy for those seeking stability or near-term catalysts, as the recovery path is uncertain and could involve further volatility.
NKE is strictly a long-term investment given its status as a multi-year turnaround story. The stock's high volatility (beta of 1.319) and lack of near-term positive catalysts make it unsuitable for short-term trading. A long-term horizon of 3-5 years is necessary to allow management's strategic initiatives to play out and for the brand to potentially regain its momentum. The 2.56% dividend yield provides a modest income stream for patient holders, but capital appreciation is contingent on the successful execution of a complex operational recovery.