Nike
NKE
$42.42
-0.35%
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 categories under brands including Nike, Jordan, and Converse. The company is a dominant market leader and brand powerhouse, distinguished by its global scale, outsourced manufacturing model, and direct-to-consumer distribution network. The current investor narrative is intensely focused on a challenging turnaround story, as the stock grapples with persistent sales weakness, collapsing profitability, and intense competitive pressures, particularly in the critical China market, which has driven the stock to multi-year lows and sparked debate over its long-term recovery potential.…
NKE
Nike
$42.42
Related headlines
Investment Opinion: Should I buy NKE Today?
Rating & Thesis: The synthesized recommendation is Hold. The core thesis is that Nike is a high-risk, speculative turnaround story where severe operational challenges are balanced by a deeply depressed valuation and a still-powerful brand, making it unsuitable for new investment until clearer signs of a fundamental inflection emerge. This aligns with the analyst consensus leaning neutral-to-cautious, as they await evidence of recovery.
Supporting Evidence: The Hold rating is supported by four conflicting data points: 1) The forward P/E of 22.95x is a premium to many value stocks but a discount to Nike's own history, creating valuation ambiguity. 2) Revenue growth is effectively stagnant at 0.09% YoY, offering no growth premium justification. 3) Profitability is collapsing, with the Q3 net margin of 4.61% down sharply from the TTM margin of 6.95%. 4) The stock price is at the absolute bottom of its 52-week range, suggesting most bad news is priced in, but the technical trend offers no support.
Risks & Conditions: The two biggest risks are a further deceleration in China revenue and another quarter of severe margin compression. This Hold would upgrade to a Buy if the company demonstrates two consecutive quarters of sequential gross margin improvement and a return to positive revenue growth. It would downgrade to a Sell if revenue growth turns negative or if the stock breaks decisively below the $41.70 support level on high volume. The current valuation is fairly valued relative to the high uncertainty but overvalued relative to the present deteriorating fundamentals.
Sign up to view all
NKE 12-Month Price Forecast
The outlook is clouded with high uncertainty, warranting a neutral stance. The bearish fundamentals of collapsing margins and no growth are stark, but the stock's position at its 52-week low suggests the market has absorbed tremendous bad news. The base case of a grinding, non-linear recovery is most probable, but the path will be volatile. Confidence is medium because the timing of a potential inflection is highly uncertain. The stance would upgrade to bullish on concrete evidence of margin recovery and sustainable revenue growth above 3%. It would turn bearish if the stock breaks key support at $41.70 on worsening fundamentals.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Nike's 12-month outlook, with a consensus price target around $55.15 and implied upside of +30.0% versus the current price.
Average Target
$55.15
14 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
14
covering this stock
Price Range
$34 - $55
Analyst target range
Analyst coverage consists of 14 firms, with recent institutional ratings showing a mix of Hold, Buy, and Overweight calls, including a notable downgrade from Needham from Buy to Hold in January 2026. The consensus recommendation leans neutral-to-cautious, reflecting the high uncertainty surrounding the turnaround. The average analyst revenue estimate for the coming period is $58.265 billion, with an average EPS estimate of $4.25, implying a forward PE of 22.95x based on the current price. The implied upside or downside to a consensus price target cannot be calculated precisely as an average target price is not provided in the data, but the recent news and rating actions suggest targets are likely being revised downward. The target range, as inferred from analyst actions, is wide, signaling high uncertainty; the high end likely assumes a successful execution of the turnaround plan with margin recovery and market share stabilization, while the low end prices in continued market share loss, margin pressure, and a prolonged downturn in China. The pattern of recent ratings shows more reaffirmations of existing Hold or Buy ratings rather than aggressive new upgrades, indicating analysts are in a 'wait-and-see' mode, awaiting clearer signs of a fundamental inflection before becoming more bullish.
Bulls vs Bears: NKE Investment Factors
The evidence currently favors the bear case, given the concrete, severe deterioration in fundamentals—collapsing margins and stagnant growth—against a backdrop of relentless negative price momentum. The bull case rests on the premise that extreme pessimism is already priced in, but this is a hope-based argument until operational trends reverse. The single most important tension in the investment debate is whether Nike's powerful brand equity and financial strength can arrest the operational decline before competitive pressures and market share losses become permanent. The resolution of this tension, visible in future revenue growth and margin trends, will definitively determine if this is a value trap or a successful turnaround.
Bullish
- Extreme Valuation Pessimism Priced In: The stock trades at $41.88, just 0.5% above its 52-week low of $41.70, and its trailing P/E of 27.95x is well below its recent historical peak above 44x. This deep value territory suggests the market has priced in severe distress, leaving limited room for further downside on valuation alone.
- Strong Balance Sheet Provides Flexibility: Nike maintains a robust current ratio of 2.21 and a manageable debt-to-equity ratio of 0.83. This financial stability provides a crucial buffer to navigate the current downturn and fund its turnaround initiatives without liquidity concerns.
- Respectable Return on Equity: Despite collapsing margins, Nike's return on equity remains strong at 24.36%. This indicates the company's brand and asset base are still capable of generating significant profits from shareholder capital, a foundational strength for a potential recovery.
- Healthy Free Cash Flow Generation: The company generated $2.475 billion in free cash flow over the trailing twelve months. This ongoing cash generation, even during a downturn, supports the dividend and provides capital for strategic reinvestment.
Bearish
- Severe Profitability Collapse: Profitability has deteriorated dramatically, with Q3 net income of $520 million down 34.5% year-over-year. The operating margin collapsed to 4.90% from 8.10% in the prior quarter, indicating deep operational distress.
- Stagnant Revenue and Growth Crisis: Revenue growth has stalled, with Q3 revenue of $11.279 billion showing a mere 0.09% year-over-year increase. This follows a sequential decline from Q2, signaling a potential contraction and a fundamental loss of momentum.
- Accelerating Negative Momentum: The stock is in a severe downtrend, down 32.88% over the past year and 33.66% over the past three months, underperforming the S&P 500 by over 42 percentage points in the last quarter. This accelerating negative relative strength shows no sign of a bottom.
- Valuation Still Demands a Turnaround: Despite the price drop, the forward P/E of 22.95x (based on $4.25 EPS estimate) still implies a premium growth expectation. With near-zero revenue growth and collapsing margins, this multiple is hard to justify and vulnerable to further compression if the turnaround falters.
NKE Technical Analysis
The prevailing price trend is a severe and sustained downtrend, with the stock down 32.88% over the past year and currently trading at just $41.88, which is near the very bottom of its 52-week range of $41.70 to $80.17. This positioning, at approximately 0.5% above the 52-week low, signals the stock is in deep value territory but also reflects extreme bearish momentum and significant fundamental distress, making it a classic 'falling knife' scenario. Recent momentum shows no signs of abatement, with the stock down 7.83% over the past month and 33.66% over the past three months, sharply underperforming the S&P 500 which is up 5.6% and 8.42% over the same periods, respectively. This severe negative relative strength of -42.08% over three months indicates the downtrend is accelerating, with no meaningful divergence or sign of a bottom forming in the short term. Key technical support is clearly defined at the 52-week low of $41.70, with a breakdown below this level likely to trigger further capitulation selling. Resistance is far above at the 52-week high of $80.17. The stock's beta of 1.124 indicates it is moderately more volatile than the broader market, which, combined with a maximum drawdown of -47.15%, underscores the heightened risk profile and the importance of disciplined position sizing for any potential contrarian investment.
Beta
1.12
1.12x market volatility
Max Drawdown
-47.1%
Largest decline past year
52-Week Range
$41-$80
Price range past year
Annual Return
-31.7%
Cumulative gain past year
| Period | NKE Return | S&P 500 |
|---|---|---|
| 1m | -7.8% | +3.3% |
| 3m | -35.3% | +6.9% |
| 6m | -30.9% | +12.4% |
| 1y | -31.7% | +23.4% |
| ytd | -33.0% | +7.6% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
NKE Fundamental Analysis
The revenue trajectory is stagnant and concerning, 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 a significant deceleration and potential contraction. The product mix shows Footwear driving the majority of sales at $7.914 billion, with Apparel at $4.476 billion, but neither segment appears to be providing meaningful growth momentum. Profitability has collapsed dramatically, with Q3 net income of $520 million representing a sharp drop from $792 million in Q2 and $794 million in the year-ago quarter. The gross margin of 40.16% in Q3 is down from 42.77% in the prior quarter, and the operating margin of 4.90% is a fraction of the 8.10% from Q2, highlighting severe margin compression. The net margin for the quarter was 4.61%, a stark deterioration from the trailing twelve-month net margin of 6.95%. 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, cash flow generation is under pressure; while free cash flow over the trailing twelve months is a solid $2.475 billion, the most recent quarterly operating cash flow was $579 million, down from $1.792 billion in the prior-year Q3. The return on equity of 24.36% remains respectable but is likely declining from recent peaks, indicating diminishing efficiency in generating profits from shareholder capital.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is NKE Overvalued?
Given the company remains profitable with positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. Nike's trailing PE ratio is 27.95x, while its forward PE is 22.95x, based on estimated EPS of $4.25. The gap between trailing and forward multiples suggests the market expects some earnings recovery, but the forward multiple still implies a premium growth expectation that may be at odds with current fundamentals. Compared to sector averages, Nike's valuation presents a mixed picture; its Price-to-Sales ratio of 1.94x and EV-to-Sales of 1.41x are likely at a discount to many high-growth apparel peers, but its PE premium is harder to justify given its near-zero growth profile. The PEG ratio of -0.66, while often distorted by negative growth expectations, signals the market does not view current earnings as sustainable. Historically, the current trailing PE of 27.95x sits well below its own historical range observed in recent quarters, which has seen peaks above 44x (Q3 FY2026) and averages in the mid-30s. Trading near the bottom of its own historical valuation band suggests the market has priced in significant pessimism, but it also reflects a fundamental deterioration that may warrant a lower multiple until a credible turnaround is demonstrated.
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 collapsing profitability and stalled growth. The Q3 operating margin of 4.90% represents a severe compression from 8.10% just a quarter prior, indicating significant pricing pressure, elevated costs, or both. Revenue growth of 0.09% YoY suggests the brand is losing its pricing power and market share, particularly in the critical China market. While free cash flow remains positive, the quarterly operating cash flow of $579 million is down sharply from $1.792 billion a year ago, signaling underlying cash generation is under pressure.
Market & Competitive Risks are heightened by Nike's valuation premium and intense sector competition. Despite the steep decline, the forward P/E of 22.95x still prices in a successful recovery, leaving the stock vulnerable to multiple compression if execution lags. News highlights competitors like On Holdings gaining momentum with raised profit guidance, directly threatening Nike in key performance categories. The stock's beta of 1.124 indicates it is moderately more volatile than the market, which, combined with its -47.15% maximum drawdown, underscores its sensitivity to negative sector sentiment and growth stock rotations.
Worst-Case Scenario involves a failure of the turnaround strategy leading to a prolonged period of market share loss and margin erosion. This could be triggered by a deeper-than-expected downturn in China, a successful competitive onslaught from rivals, and continued missteps in product innovation. In this adverse scenario, the stock could re-test and break below its 52-week low of $41.70, potentially falling towards levels implied by a distressed multiple on declining earnings. A realistic downside from the current price could be -20% to -30%, revisiting the lows of the financial crisis or other historical stress periods, representing a significant loss for investors entering at current levels.
FAQ
The key risks are, in order of severity: 1) Operational Risk: Continued collapse in profitability, evidenced by the Q3 operating margin falling to 4.90% from 8.10% the prior quarter. 2) Competitive Risk: Intense pressure from agile rivals like On Holdings, which are gaining share in performance categories. 3) Geographic Risk: A prolonged downturn in the critical China market, which represents a major growth engine. 4) Valuation Risk: The forward P/E of 22.95x could compress further if the turnaround stalls, leading to additional price declines even if earnings don't fall.
The 12-month forecast is highly bifurcated, with a base case target range of $48-$58 (55% probability), a bull case of $65-$75 (25% probability), and a bear case of $35-$42 (20% probability). The base case, which is most likely, assumes a messy, prolonged turnaround with flat revenue and stabilized but depressed margins. The key assumption behind this forecast is that Nike's brand strength and balance sheet will prevent a full-scale crisis but will not be enough to drive a rapid V-shaped recovery in the near term.
NKE's valuation is a paradox: it appears undervalued relative to its own history but overvalued relative to its current fundamentals. The trailing P/E of 27.95x is well below its recent historical peaks above 44x, suggesting pessimism is priced in. However, the forward P/E of 22.95x still implies the market expects an earnings recovery (to $4.25 EPS). Given the near-zero growth and margin collapse, this multiple is difficult to justify on a standalone basis, indicating the stock is fairly valued to slightly overvalued unless a turnaround materializes swiftly.
NKE is not a clear-cut good buy at present; it is a high-risk, speculative turnaround bet. The stock trades near multi-year lows, offering a depressed valuation, but this is justified by severe operational challenges including 0.09% revenue growth and collapsing margins. For a patient, risk-tolerant investor willing to wait 2-3 years for a potential recovery, it could represent a contrarian opportunity. However, for most investors, it is a 'Hold' until there is concrete evidence of a fundamental inflection, such as a return to revenue growth and margin stabilization.
NKE is unsuitable for short-term trading due to its high volatility (beta of 1.124), negative momentum, and lack of near-term catalysts. It is only appropriate for a long-term investment horizon of 3-5 years, allowing time for a potential multi-year turnaround story to play out. The company's strong brand and financials provide a foundation for long-term recovery, but investors must be prepared for significant volatility and uncertainty along the way. A minimum holding period of 18-24 months is suggested to weather the operational turbulence.