Nike
NKE
$33.96
+0.27%
Nike, Inc. is the world's largest athletic footwear and apparel brand, designing and marketing performance products across basketball, running, soccer, and training, with footwear generating roughly two-thirds of sales and a portfolio spanning Nike, Jordan, NikeSkims, and Converse. The company operates a vertically integrated model combining wholesale distribution to third-party retailers, more than 5,500 franchised stores in China, company-owned retail, and e-commerce platforms in over 40 countries, with nearly all production outsourced to contract manufacturers across 30-plus nations. The current investor narrative has turned sharply negative: the stock has collapsed to a 12-year low after Q1 FY2027 results featured an earnings beat but a revenue miss, a guidance cut projecting up to a 50% earnings decline for the full year, and persistent weakness in Greater China and Converse. Debate now centers on whether this is a cyclical trough driven by tariffs, inventory resets, and macro headwinds, or evidence of structural market-share loss to competitors like On, Hoka, and a resurgent Adidas, with the dividend's sustainability and the pace of any turnaround under scrutiny.…
NKE
Nike
$33.96
Related headlines
Investment Opinion: Should I buy NKE Today?
The synthesized recommendation is Hold, with a cautious bias. Nike's brand strength, deep valuation compression (PS of 1.47x vs. historical >6x), and analyst average target of $40.79 (20.4% upside) suggest the stock is not a sell at these levels. However, the guidance cut projecting up to a 50% earnings decline, revenue miss, and market share loss create too much uncertainty to justify a Buy. The consensus recommendation of "hold" with a mean of 2.76 aligns with this view.
Supporting evidence for a Hold includes the forward PE of 19.20x, which is in line with the sector average but not cheap given the earnings outlook; the dividend yield of 3.53% with a payout ratio of 77.4%, which is at risk; the gross margin of 49.15% in Q4 FY2026, which improved sequentially but remains below the 45.36% peak; and the free cash flow of $2.18 billion TTM, which is positive but declining. The analyst target range of $19 to $94 highlights the extreme uncertainty, and the recent downgrade by B of A Securities to Underperform underscores the bearish sentiment.
The biggest risks that could invalidate the Hold rating include a dividend cut, which would likely trigger further selling, and a continued decline in Greater China and Converse. The rating would upgrade to Buy if revenue growth stabilizes and gross margins hold above 45%, or if the forward PE compresses below 15x on stabilized earnings. It would downgrade to Sell if revenue declines accelerate beyond -5% year-over-year or if the dividend is cut. Relative to its history and peers, Nike appears undervalued on a PS basis but fairly valued on forward earnings given the deteriorating fundamentals. The stock is a classic value trap until there is evidence of a turnaround.
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NKE 12-Month Price Forecast
The forward-looking view is bearish due to the severe earnings decline guidance, deteriorating revenue trends, and market share loss. While the valuation appears depressed on a PS basis, the forward PE of 19.20x is not attractive if earnings halve. The dividend yield of 3.53% is at risk, and the analyst consensus of "hold" with a mean of 2.76 reflects caution. We would upgrade to neutral if revenue stabilizes and gross margins hold above 45%, and to bullish if earnings decline less than 20% with clear market share gains. Conversely, a dividend cut or acceleration in revenue declines would reinforce the bearish stance.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Nike's 12-month outlook, with a consensus price target around $39.99 and implied upside of +17.8% versus the current price.
Average Target
$39.99
0 analysts
Implied Upside
+17.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$19 - $94
Analyst target range
Nike is covered by 36 analysts, with a consensus recommendation of "hold" and a recommendation mean of 2.76 (where 1 is Strong Buy and 5 is Strong Sell), indicating a neutral-to-cautious stance. The average target price is $40.79, which implies approximately +20.4% upside from the current price of $33.87, but this average is skewed by a few optimistic outliers and does not reflect the recent guidance cut. The consensus leans neutral at best, with recent institutional ratings showing a clear tilt toward caution: B of A Securities downgraded to Underperform on September 25, while RBC Capital, Deutsche Bank, Evercore ISI, Piper Sandler, Stifel, and UBS all maintain Hold/Neutral/Sector Perform ratings, and only Oppenheimer, BTIG, and Barclays remain constructive with Outperform/Buy/Overweight ratings. The target range is extraordinarily wide, from a low of $19.00 to a high of $94.00 — a 395% spread that signals deep uncertainty and disagreement among analysts about Nike's trajectory. The high target of $94.00 assumes a successful turnaround with margin recovery, market-share stabilization, and multiple expansion back toward historical norms, while the low target of $19.00 prices in a scenario of continued share loss, margin compression, and a potential dividend cut. The wide spread, combined with the recent downgrade and the guidance cut, suggests analysts are scrambling to recalibrate their models, and the average target of $40.79 may be stale relative to the post-guidance reality. With estimated EPS average of $3.00 for the forward year and estimated revenue average of $46.41 billion, the analyst community is projecting a modest recovery, but the dispersion of estimates (EPS low of $2.82 to high of $3.18) and the recent negative revisions indicate that confidence in even these reduced numbers is fragile.
Bulls vs Bears: NKE Investment Factors
The bear case currently has stronger evidence, driven by the guidance cut projecting up to a 50% earnings decline, deteriorating revenue and margin trends, and clear market share loss to competitors. The bull case rests on deep valuation compression, brand strength, and potential mean reversion, but these are speculative until fundamental stabilization occurs. The single most important tension is whether Nike's current troubles are cyclical (tariffs, inventory resets, macro headwinds) or structural (brand erosion, competitive displacement). If cyclical, the stock is deeply undervalued; if structural, even the low analyst target of $19 could prove optimistic. Near-term, the momentum and fundamental trends favor the bears, but the extreme pessimism embedded in the valuation warrants caution for short sellers.
Bullish
- Brand strength and global scale: Nike is the world's largest athletic footwear and apparel brand, with footwear generating about two-thirds of sales and a portfolio spanning Nike, Jordan, NikeSkims, and Converse. The company operates in over 40 countries with more than 5,500 franchised stores in China alone, providing unmatched distribution and brand recognition. This scale creates a durable competitive moat that could support a turnaround once headwinds subside.
- Attractive valuation versus history: The PS ratio of 1.47x is a fraction of Nike's historical average above 6x, and the forward PE of 19.20x is near the low end of its five-year range of 24x-50x. This deep de-rating reflects extreme pessimism, and any stabilization in earnings could trigger significant multiple expansion. The EV/Sales of 1.17x also suggests the market is pricing in a permanent impairment of the brand's revenue power.
- Analyst upside and dividend yield: The consensus average target price of $40.79 implies approximately 20.4% upside from the current price of $33.87, even after recent guidance cuts. Additionally, the dividend yield of 3.53% provides income support, and the payout ratio of 77.4% may be sustainable given the company's $7.56 billion in cash and $2.18 billion in trailing free cash flow. If earnings stabilize, the dividend could attract income-oriented investors.
- Oversold technical conditions: The stock is trading just 4.5% above its 52-week low of $31.97 and has fallen 54.6% over the past year, with a max drawdown of 56.53%. The 1-month relative strength versus SPY is -12.02%, indicating extreme underperformance that often precedes mean reversion. A capitulation-style drop of -3.64% on heavy volume of 142.6 million shares could signal selling exhaustion.
Bearish
- Guidance cut signals severe earnings decline: Management cut full-year guidance projecting up to a 50% earnings decline, a stark reversal from prior expectations. This follows a Q1 FY2027 revenue miss with sharp declines in Greater China and Converse, indicating broad-based weakness. The forward PE of 19.20x is not cheap if earnings are set to halve, as the multiple would expand even if the stock price stays flat.
- Deteriorating revenue and margin trends: Revenue declined -1.13% year-over-year in Q4 FY2026 to $10.97 billion, with sequential deceleration from $12.43 billion in Q2 to $11.28 billion in Q3 to $10.97 billion in Q4. Operating margin fell to 11.98% in Q4 FY2026 from 12.26% in Q4 FY2024, and net margin compressed to 9.74% from 9.41% in Q2 FY2025. These trends suggest structural challenges, not just cyclical headwinds.
- Market share loss to competitors: Nike is losing market share to nimble competitors like On, Hoka, and a resurgent Adidas, particularly in the performance footwear category. The footwear segment, which generates $15.04 billion in revenue, is facing the brunt of this competitive pressure. This erosion of the core franchise raises concerns about the durability of Nike's brand premium and pricing power.
- Dividend sustainability concerns: The dividend payout ratio of 77.4% is dangerously high given the projected 50% earnings decline, and the company paid $609 million in dividends in Q4 FY2026 while generating $1.499 billion in free cash flow. With capital expenditures of $138 million and the need to invest in turnaround initiatives, the dividend may be at risk of a cut. A dividend reduction would likely trigger further selling from income-focused investors.
NKE Technical Analysis
Nike is in a severe, sustained downtrend, with the current price of $33.87 sitting just 4.5% above its 52-week low of $31.97 and a staggering 54.7% below its 52-week high of $74.78 — meaning the stock trades at only about 8% of its 52-week range, deep in oversold territory. The 1-year price change of -54.58% and year-to-date decline of -46.48% confirm this is not a pullback but a structural bear market for the equity, with the max drawdown of -56.53% underscoring the magnitude of wealth destruction. At this positioning, the stock is a classic falling knife: near lows can signal value, but without a confirmed base, momentum remains decisively negative. Recent momentum has accelerated to the downside, with the 1-month change of -11.43% and 3-month change of -23.18% both worse than the 6-month decline of -23.35%, indicating selling pressure is intensifying rather than stabilizing. The most recent session saw a -3.64% drop on heavy volume of 142.6 million shares, a capitulation-style move following the guidance cut, and the 1-month relative strength versus SPY of -12.02% (vs. SPY's +0.59%) shows Nike is dramatically underperforming the market. This divergence from a rising broad market (SPY +15.01% over 1 year) signals company-specific distress rather than macro-driven weakness, and the absence of any positive momentum inflection suggests the downtrend remains intact. Key technical levels are clear: support rests at the 52-week low of $31.97, and a breakdown below that level would likely trigger further selling and open the door to the high-$20s. Resistance is formidable, with the 52-week high of $74.78 more than 120% above the current price, and nearer-term resistance likely forming around the $40 psychological level where prior consolidation occurred. With a beta of 1.11, Nike is only modestly more volatile than the market, but the stock's idiosyncratic collapse means its realized volatility far exceeds what beta implies, making position sizing and stop discipline critical for anyone attempting to catch this falling knife.
Beta
1.10
1.10x market volatility
Max Drawdown
-55.0%
Largest decline past year
52-Week Range
$32-$72
Price range past year
Annual Return
-52.8%
Cumulative gain past year
| Period | NKE Return | S&P 500 |
|---|---|---|
| 1m | -11.6% | +0.6% |
| 3m | -21.4% | +3.6% |
| 6m | -21.3% | +14.6% |
| 1y | -52.8% | +15.8% |
| ytd | -46.3% | +13.6% |
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NKE Fundamental Analysis
Nike's revenue trajectory has turned negative, with the most recent quarter (Q4 FY2026, ended May 31, 2026) posting $10.97 billion in revenue, a -1.13% year-over-year decline, following $11.28 billion in Q3 and $12.43 billion in Q2 — a clear sequential deceleration. The multi-quarter trend is deteriorating: revenue fell from $12.43 billion in Q2 FY2026 to $11.28 billion in Q3 to $10.97 billion in Q4, and the Q1 FY2027 report (released October 1, 2026) missed revenue expectations with sharp declines in Greater China and Converse. Segment data shows footwear at $15.04 billion and apparel at $7.57 billion, with footwear — the core franchise — facing the brunt of competitive pressure, while the guidance cut projecting up to a 50% earnings decline implies revenue headwinds will persist well into FY2027. Profitability remains positive but is compressing: Q4 FY2026 net income was $1.069 billion with a net margin of 9.74%, down from $1.163 billion and a 9.41% margin in Q2 FY2025, and gross margin of 49.15% in Q4 FY2026 improved sequentially from 40.16% in Q3 but remains below the 45.36% peak seen in Q1 FY2025. The gross margin volatility reflects heavy discounting, inventory clearance, and tariff pressures, and with operating margin at just 11.98% in Q4 FY2026 versus 12.26% in Q4 FY2024, the company is losing pricing power and operating leverage. The guidance for up to a 50% earnings decline signals that margin compression will worsen before it improves, challenging the bull case that brand strength can protect profitability. The balance sheet is a relative bright spot but shows strain: debt-to-equity stands at 0.74, current ratio at 1.96, and ROE at 20.91%, but free cash flow TTM of $2.18 billion is down sharply from prior levels, and the dividend payout ratio of 77.4% is dangerously high given the earnings outlook. Q4 FY2026 operating cash flow was $1.637 billion with free cash flow of $1.499 billion, but this was bolstered by working capital releases that may not repeat, and the company paid $609 million in dividends during the quarter — a commitment that consumes a disproportionate share of cash flow. With capital expenditures of $138 million in Q4 and cash of $7.56 billion, Nike has liquidity, but the combination of declining earnings, a stretched payout ratio, and the need to invest in turnaround initiatives raises questions about whether the dividend can be maintained at current levels without compromising financial flexibility.
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?
With net income positive at $1.069 billion in the most recent quarter and trailing EPS of $0.046, the PE ratio is the primary metric, and Nike trades at a trailing PE of 21.87x versus a forward PE of 19.20x — a relatively narrow gap that implies the market expects only modest earnings growth, a stark contrast to the guidance for up to a 50% earnings decline. The trailing PE of 21.87x is misleadingly low because it reflects the depressed trailing earnings base; on forward estimates, the stock trades at 19.20x, which for a company facing a potential 50% earnings decline is not cheap. The PEG ratio of -6.78 is negative and meaningless given the earnings contraction, and the PS ratio of 1.47x and EV/Sales of 1.17x suggest the market is pricing in a significant de-rating of the brand's revenue power. Compared to the broader apparel and footwear sector, where established brands typically trade at 15-25x forward earnings, Nike's 19.20x forward PE is roughly in line with the sector average, but this parity is unjustified given Nike's deteriorating fundamentals, market-share loss, and negative growth trajectory. The stock's PS ratio of 1.47x is well below its historical average, reflecting the market's skepticism about revenue durability, and the EV/EBITDA of 15.58x is elevated relative to the earnings decline, suggesting the market has not fully priced in the severity of the guidance cut. Historically, Nike has traded at a premium to the market, with PE ratios ranging from 24x to 50x over the past five years and PS ratios consistently above 6x; the current PS of 1.47x is a fraction of those levels, indicating the stock is near the bottom of its own historical valuation band. However, this is not necessarily a value opportunity — the compression reflects genuine fundamental deterioration, and with earnings expected to halve, the forward PE could expand even if the stock price stays flat, meaning the valuation is not as cheap as it appears on trailing metrics.
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
15.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are substantial. The company faces a projected 50% earnings decline, with revenue already contracting -1.13% year-over-year in Q4 FY2026. The dividend payout ratio of 77.4% is unsustainable if earnings halve, and free cash flow of $2.18 billion TTM is down sharply from prior levels, limiting financial flexibility. Additionally, the debt-to-equity ratio of 0.74 and current ratio of 1.96 provide some cushion, but the need to invest in turnaround initiatives while maintaining the dividend could strain the balance sheet further. The gross margin volatility, from 40.16% in Q3 FY2026 to 49.15% in Q4 FY2026, reflects ongoing discounting and inventory issues that may persist.
Market and competitive risks are intensifying. Nike is losing market share to On, Hoka, and Adidas, particularly in performance footwear, and its Greater China business is weakening, as evidenced by sharp declines in the region. The stock's beta of 1.11 suggests modest market correlation, but its idiosyncratic collapse (-54.58% over one year) far exceeds what beta implies, indicating company-specific distress. Valuation compression risk remains: the forward PE of 19.20x is in line with the sector, but this parity is unjustified given Nike's deteriorating fundamentals. If the brand's pricing power continues to erode, the multiple could contract further, especially if earnings decline more than expected.
In a worst-case scenario, continued market share loss, a dividend cut, and a deeper earnings decline could drive the stock below its 52-week low of $31.97. The analyst low target of $19.00 represents a -43.9% downside from the current price of $33.87, and if the company fails to stabilize revenue and margins, the stock could test that level. A breakdown below $31.97 would likely trigger further selling, opening the door to the high-$20s. From the current price, an investor could lose approximately 44% in this adverse scenario, not including the potential loss of dividend income if the payout is reduced.
FAQ
The most severe risk is a dividend cut, given the payout ratio of 77.4% and projected 50% earnings decline, which would likely cause a sharp sell-off. Second, continued market share loss to competitors like On, Hoka, and Adidas could further erode revenue and margins. Third, a breakdown below the 52-week low of $31.97 could trigger technical selling and push the stock toward the analyst low target of $19.00. Fourth, macro headwinds and tariff pressures could exacerbate the decline, and the company's beta of 1.11 means it is modestly more volatile than the market. These risks are ranked from most to least severe, with the dividend cut being the most immediate threat.
Our 12-month forecast has a base case (50% probability) of $35-$45, assuming revenue stabilizes and earnings decline 30-40%. The bull case (20% probability) targets $55-$65, driven by a successful turnaround and multiple expansion. The bear case (30% probability) targets $19-$28, reflecting continued market share loss and a dividend cut. The most likely scenario is the base case, with the key assumption that revenue declines moderate and gross margins stabilize around 43-45%. However, the wide analyst target range of $19 to $94 underscores the high uncertainty.
NKE appears undervalued on a price-to-sales basis, with a PS ratio of 1.47x compared to its historical average above 6x. However, on forward earnings, the stock trades at 19.20x, which is in line with the sector average but not cheap given the deteriorating fundamentals. The EV/EBITDA of 15.58x is elevated relative to the earnings decline, suggesting the market has not fully priced in the severity of the guidance cut. The negative PEG ratio of -6.78 is meaningless due to earnings contraction. Overall, the valuation is a mixed picture: deeply depressed on revenue multiples but fair on earnings, implying the market expects a permanent impairment of the brand's growth trajectory.
NKE is not a good buy for most investors at current levels due to the severe earnings decline guidance and market share loss. The stock trades at $33.87, with a forward PE of 19.20x that is not cheap given the projected 50% earnings decline. The analyst average target of $40.79 implies 20.4% upside, but the low target of $19.00 represents 43.9% downside, creating an unfavorable risk/reward. The dividend yield of 3.53% is at risk of being cut, which would likely trigger further selling. Only contrarian investors with a high risk tolerance and a long time horizon should consider buying, and even then, waiting for evidence of a turnaround is prudent.
NKE is more suitable for long-term investment for patient investors who believe in the brand's turnaround potential, but it is not appropriate for short-term trading due to high volatility and negative momentum. The stock has a beta of 1.11, but its realized volatility is much higher, with a 54.6% decline over the past year. The dividend yield of 3.53% may appeal to income investors, but the payout ratio of 77.4% is a red flag. A suggested minimum holding period is 2-3 years to allow for a potential turnaround, but investors should be prepared for further downside and monitor the dividend sustainability closely.