Nike, Inc.

Based on the provided technical, fundamental, valuation, and risk data, here is a comprehensive analysis of Nike (NKE).

Technical Analysis Nike has shown persistent weakness, underperforming the market significantly despite its high beta, which suggests it should thrive in bullish conditions. While the stock is in a recovery phase after a deep drawdown, it still faces considerable resistance near its 52-week high. The technical picture points to a stock that is struggling to gain bullish momentum.

Fundamental Analysis Fundamentally, Nike presents a mixed but stable picture. Revenue growth remains solid, and the company's financial health is robust with strong liquidity and a conservative debt load. However, profitability is under pressure from margin compression, and operational efficiency metrics like inventory turnover indicate areas needing improvement.

Valuation Valuation is a primary concern, as Nike trades at a significant premium across most metrics. The high P/E and an exceptionally elevated EV/EBITDA ratio are notable, but the PEG ratio near 3.0 is the most alarming, suggesting the stock's price is not justified by its expected earnings growth.

Risk Assessment The stock carries above-market volatility, as evidenced by its beta and substantial maximum drawdown over the past year. The primary risks are tied to this price volatility and broader macroeconomic pressures on consumer discretionary spending, rather than negative market sentiment.

Recommendation: HOLD Nike's strong brand and healthy balance sheet provide a solid foundation, but these positives are currently overshadowed by its rich valuation and weak technical momentum. For the stock to become a compelling buy, investors would need to see either a meaningful pullback to improve the risk/reward profile or clearer signs of a sustained technical recovery and improved margin trends. At the current level, the risk of overpayment is high.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for Nike (NKE):

The primary near-term catalyst for a re-rating hinges on Nike demonstrating improved operational efficiency, specifically reversing margin compression and driving stronger profitability to justify its premium valuation. Key risks include persistent macroeconomic pressure on consumer discretionary spending and the stock's inherent high volatility, which could lead to further declines if earnings growth fails to meet elevated expectations. Given the current lack of analyst targets and the concerning PEG ratio, a cautious target range of $60-$75 seems appropriate, reflecting the potential for both a further de-rating if margins disappoint and a recovery if the company successfully executes its turnaround plans.

Wall Street Consensus

Most Wall Street analysts are optimistic about Nike, Inc.'s 12-month outlook, with consensus target around $64.38, indicating expected upside potential.

Overall, NKE has investment potential but also faces challenges. Here are key factors to weigh before investing.

NKE has demonstrated weak performance with notable underperformance relative to the broader market over recent periods. The stock remains substantially below its 52-week high despite recent price levels being above the midpoint of its annual range.

Short-term performance shows consistent weakness, with NKE declining approximately 2% over both one and three months while underperforming the market by nearly 6% during the latter period. This underperformance is particularly notable given the stock's beta above 1, indicating it should typically outperform in rising markets but has failed to do so.

Currently trading at approximately 63% of the distance from its 52-week low to high, NKE appears neither strongly overbought nor oversold but remains closer to the lower end of its range following last year's significant 35% drawdown. The current price suggests the stock is in a recovery phase but still faces substantial resistance levels approaching its yearly high.

Revenue & Profitability Nike demonstrated solid revenue growth, increasing from $11.72 billion to $12.43 billion quarter-over-quarter. However, profitability metrics showed pressure with gross margin declining to 40.6% from 42.2% and operating margin holding steady near 8.1%. The net profit margin of 6.4% reflects the company's ability to maintain profitability despite margin compression.

Financial Health The company maintains a strong liquidity position with a current ratio of 2.06 and quick ratio of 1.40. Nike's conservative debt structure is evidenced by a low debt ratio of 29.9% and healthy interest coverage of 11.2x. The cash ratio of 0.60 provides adequate short-term flexibility.

Operational Efficiency Nike's operational efficiency appears mixed, with ROE at 5.6% and asset turnover of 0.33 indicating moderate asset utilization. The cash conversion cycle of 90 days reflects reasonable working capital management, though inventory turnover of 0.96 suggests potential room for improvement in inventory management efficiency.

Nike's valuation metrics indicate a premium valuation across multiple dimensions. The stock trades at elevated multiples with a TTM PE of 38.5, forward PE of 30.5, and a notably high PB ratio of 6.9 and EV/EBITDA of 101.1. Particularly concerning is the PEG ratio approaching 3.0, which suggests the current price significantly outpaces expected earnings growth, pointing to overvaluation.

Without specific industry average data for comparison, a comprehensive peer analysis cannot be conducted. However, the exceptionally high EV/EBITDA ratio and premium multiples generally imply that Nike trades at a significant premium relative to broader market valuations. Investors should interpret these metrics cautiously given the absence of sector benchmarks for context.

NKE exhibits modest volatility risk characterized by a Beta of 1.284, indicating it is approximately 28% more volatile than the broader market. This suggests investors should expect slightly amplified price swings compared to an index fund. Furthermore, the stock has experienced a significant maximum drawdown of -34.81% over the past year, demonstrating a substantial capacity for loss during market downturns, which is a key consideration for risk-averse investors.

The primary risk appears to stem from its price volatility rather than market sentiment, as the noted absence of significant short interest implies a lack of concentrated betting against the stock's success. However, NKE's large market capitalization and high trading volume do not entirely mitigate execution risk, which can still impact large institutional trades. Investors should also be mindful of macroeconomic pressures affecting consumer discretionary spending, a sector to which NKE is highly exposed.