Nike
NKE
$37.13
-0.03%
Nike, Inc. designs, markets, and distributes athletic footwear, apparel, and accessories globally, with footwear generating roughly two-thirds of sales across basketball, running, and soccer categories, complemented by the Jordan, NikeSkims, and Converse brands sold through company-owned stores, franchised partners (including about 5,500 doors in China), third-party retailers, and e-commerce platforms in more than 40 countries, with nearly all production outsourced to contract manufacturers in over 30 countries. As the largest athletic footwear and apparel brand in the world, Nike is a scaled global brand owner rather than a manufacturer, and its competitive identity rests on brand equity, athlete endorsement marketing, and wholesale-plus-direct distribution reach. The current investor narrative has turned decisively negative: the most recent quarterly report featured an EPS beat but a revenue miss, sharp declines in Greater China and Converse, and full-year guidance implying a high-single-digit revenue decline and a potential earnings drop of up to 50%, which has reframed the debate from "when does the turnaround inflect" to "how deep is the reset and is the dividend sustainable." Commentary around the stock now centers on weakening consumer demand, lost market share to competitors, dividend coverage strain (payout ratio near 77%), and whether the brand's long-term strength can offset a multi-quarter earnings trough.…
NKE
Nike
$37.13
Related headlines
Investment Opinion: Should I buy NKE Today?
Rating: Hold. Nike's brand strength and global scale provide a long-term moat, but near-term fundamentals are deteriorating, with management guiding for a high-single-digit revenue decline and up to 50% earnings drop. The analyst consensus is hold (mean 2.81) with an average target of $37.67, essentially flat to the current price, suggesting limited upside until visibility improves.
Supporting evidence: The forward P/E of 22.4 is based on estimated EPS of $3.00, but if earnings halve, the effective multiple becomes expensive. Revenue growth is negative (-1.13% YoY in Q4 2026), and margins are under pressure, with operating margin at 8.19% and net margin at 6.70%. Free cash flow of $2.18 billion is positive but may not cover the dividend, given the 77.4% payout ratio. The dividend yield of 3.53% is attractive but at risk of being cut. The stock trades at 1.47x sales, which is not demanding, but without earnings growth, it's not a bargain.
Risks: The biggest risks are a dividend cut, continued market share losses, and a deeper earnings decline. The rating would upgrade to Buy if revenue stabilizes and earnings growth resumes, with the forward P/E dropping below 20x on sustainable earnings. It would downgrade to Sell if the dividend is cut or if revenue declines accelerate beyond high-single-digits. Relative to history and peers, the stock appears fairly valued to slightly overvalued given the negative growth outlook, but the brand's long-term potential warrants a Hold rather than Sell.
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NKE 12-Month Price Forecast
The risk/reward is skewed to the downside given the deteriorating fundamentals and uncertain turnaround. While the brand is strong, the near-term earnings trajectory is negative, and the dividend is at risk. The stock could see further downside if guidance is not met. An upgrade would require evidence of revenue stabilization and margin improvement, while a downgrade would follow a dividend cut or worse-than-expected results.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Nike's 12-month outlook, with a consensus price target around $36.51 and implied upside of -1.7% versus the current price.
Average Target
$36.51
0 analysts
Implied Upside
-1.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$19 - $60
Analyst target range
Bulls vs Bears: NKE Investment Factors
The bear case currently has stronger evidence, given management's guidance for a high-single-digit revenue decline and up to 50% earnings drop, coupled with a stretched dividend payout and deteriorating fundamentals. The bull case rests on Nike's enduring brand strength, global scale, and the potential for a turnaround, but near-term visibility is poor. The most critical tension is whether the earnings reset is a temporary trough or a permanent impairment of the brand's pricing power and market position. Resolution will hinge on upcoming quarterly results, particularly in China and Converse, and management's ability to stabilize revenue and protect margins.
Bullish
- Brand moat and global scale: Nike remains the largest athletic footwear and apparel brand globally, with footwear generating about two-thirds of sales and distribution across more than 40 countries. This scale supports a gross margin of 42.9% (TTM) and a return on equity of 20.9%, indicating enduring pricing power and capital efficiency despite the current downturn.
- Analyst target implies upside: The average analyst target price of $37.67 is roughly in line with the current price of $37.13, but the high target of $94.00 suggests significant recovery potential if the turnaround succeeds. The recommendation mean of 2.81 (hold) reflects caution, yet the wide target range underscores the binary nature of the outcome.
- Dividend yield attractive: The dividend yield of 3.53% is well above the S&P 500 average, providing income support. However, the payout ratio of 77.4% raises questions about sustainability, but management may prioritize maintaining the dividend to signal confidence.
- Valuation not stretched on sales: The price-to-sales ratio of 1.47 and enterprise value-to-sales of 1.26 are relatively modest for a brand with Nike's global recognition. If revenue stabilizes, these multiples could expand, especially given the forward P/E of 22.4, which is below the trailing P/E of 21.9 only slightly, implying earnings are expected to be roughly flat.
Bearish
- Guidance points to severe earnings decline: Management guided for a high-single-digit revenue decline and a potential earnings drop of up to 50% for the full year, following a Q1 revenue miss and sharp declines in Greater China and Converse. This outlook implies significant pressure on profitability, with the current EPS of $0.046 (TTM) already reflecting the downturn.
- Dividend coverage under strain: The payout ratio of 77.4% is elevated, and with earnings expected to halve, the dividend may not be covered by free cash flow. Free cash flow TTM is $2.18 billion, while dividends paid are likely higher, raising the risk of a dividend cut, which would likely trigger further selling.
- Valuation appears expensive given earnings collapse: The forward P/E of 22.4 is based on estimated EPS of $3.00, but if earnings decline by 50% to around $1.50, the effective P/E would be nearly 25x, which is high for a company with negative growth. The PEG ratio of -6.78 reflects the negative earnings growth expectation.
- Weak consumer demand and market share loss: Recent news highlights weakening consumer demand and lost market share to competitors like Lululemon and others. The revenue miss in Q1 and the 1.13% year-over-year revenue decline (Q4 2026) signal persistent top-line pressure, with Greater China and Converse particularly weak.
NKE Technical Analysis
Beta
1.10
1.10x market volatility
Max Drawdown
-54.6%
Largest decline past year
52-Week Range
$32-$70
Price range past year
Annual Return
-44.4%
Cumulative gain past year
| Period | NKE Return | S&P 500 |
|---|---|---|
| 1m | +3.8% | +0.2% |
| 3m | -15.2% | +2.9% |
| 6m | -19.3% | +8.4% |
| 1y | -44.4% | +14.9% |
| ytd | -41.3% | +11.9% |
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NKE Fundamental Analysis
Quarterly Revenue
$11.0B
2026-05
Revenue YoY Growth
-1.1%
YoY Comparison
Gross Margin
49.1%
Latest Quarter
Free Cash Flow
$2.2B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NKE Overvalued?
PE
21.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 16x~50x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant: Nike's payout ratio of 77.4% is elevated, and with earnings expected to decline by up to 50%, the dividend may become unsustainable, potentially leading to a cut that would further erode investor confidence. Free cash flow TTM of $2.18 billion provides some cushion, but if revenue continues to decline, cash generation could weaken. Additionally, the company's debt-to-equity ratio of 0.74 is manageable, but the current ratio of 1.96 indicates adequate liquidity. However, the sharp decline in net income from $1.06 billion in Q4 2026 to an estimated annualized run rate of much lower levels highlights earnings volatility. Operational risks include supply chain disruptions and reliance on contract manufacturers in over 30 countries, but these are secondary to demand issues.
Market and competitive risks are pronounced: Nike faces intense competition from brands like Lululemon, Adidas, and emerging Chinese players, leading to market share losses. The stock's beta of 1.10 indicates it is slightly more volatile than the market, but the real risk is valuation compression. With a forward P/E of 22.4 and negative growth, the stock could de-rate further if earnings disappoint. Recent news highlights weakening consumer demand and a revenue miss, which could trigger further downgrades. Additionally, macroeconomic headwinds, such as slowing consumer discretionary spending, pose a threat. The relative strength of -59.98% over the past year versus the S&P 500 underscores the severe underperformance and negative sentiment.
Worst-case scenario: A continued decline in revenue, particularly in China and Converse, coupled with a dividend cut and further earnings misses, could drive the stock to its 52-week low of $31.97, representing a 13.9% downside from the current price of $37.13. If the bear case fully materializes, with earnings dropping 50% and the dividend eliminated, the stock could fall to the analyst low target of $19.00, a 48.8% decline. The maximum drawdown over the past period was -54.58%, indicating the potential for severe losses in a prolonged downturn. Investors could lose nearly half their investment if the turnaround fails and sentiment remains negative.
FAQ
The most severe risk is a dividend cut, given the 77.4% payout ratio and expected earnings decline. This would likely trigger a sharp selloff. Second, continued market share losses to competitors like Lululemon and Adidas could further pressure revenue. Third, a deeper macroeconomic downturn could reduce consumer discretionary spending, hitting Nike's sales. Fourth, operational risks include supply chain disruptions and currency fluctuations. The stock's beta of 1.10 means it is slightly more volatile than the market, but the idiosyncratic risks are more significant.
Our 12-month forecast has a base case (50% probability) of $35-40, assuming revenue declines moderate and earnings meet guidance. The bull case (20% probability) targets $55-65 on a successful turnaround, while the bear case (30% probability) targets $19-32 if conditions worsen. The most likely scenario is the base case, where the stock trades sideways as investors await clarity. Key assumptions include a high-single-digit revenue decline and no dividend cut. However, if the dividend is cut, the bear case becomes more probable.
NKE appears overvalued on a growth-adjusted basis. The forward P/E of 22.4 is high for a company with negative revenue growth and expected earnings decline. The PEG ratio is negative (-6.78), reflecting the earnings contraction. On a price-to-sales basis, 1.47x is not excessive for a brand like Nike, but without earnings growth, it's not a bargain. Compared to its own history, the stock has traded at higher multiples during growth phases, but the current outlook justifies a lower multiple. The market is pricing in a successful turnaround, which may be optimistic.
NKE is not a compelling buy at current levels given the high uncertainty around earnings and the dividend. The stock trades at a forward P/E of 22.4 based on EPS estimates that may prove optimistic if the earnings decline reaches 50%. The average analyst target of $37.67 offers minimal upside, while the bear case target of $19.00 implies significant downside. However, for long-term investors with a strong belief in Nike's brand recovery, the current price could be an entry point if they can tolerate volatility. A better entry would be closer to the 52-week low of $31.97 or upon clear signs of revenue stabilization.
NKE is more suitable for long-term investors with a horizon of at least 3-5 years, given the current turnaround uncertainty. Short-term trading is risky due to high volatility and negative momentum. The dividend yield of 3.53% provides some income, but its sustainability is in question. The stock's beta of 1.10 and recent underperformance suggest it may continue to be volatile. A patient investor could accumulate shares on further weakness, but a minimum holding period of 2-3 years is advisable to allow for a potential recovery.