Nike Inc. (NKE) Stock Analysis



Nike, Inc., an American multinational corporation, is renowned worldwide for its athletic footwear, apparel, equipment, and accessories. Established on January 25, 1964, as Blue Ribbon Sports by Bill Bowerman and Phil Knight, the company officially became Nike, Inc. in 1971, taking its name from the Greek goddess of victory. With its headquarters near Beaverton, Oregon, Nike has grown to become the largest supplier of athletic shoes and apparel in the world, a notable achievement underscoring its prominent market position.


Nike’s iconic “Swoosh” logo and its “Just Do It” slogan are among the most recognized branding elements globally. Over the years, the company has dedicated itself to inspiring and innovating for every athlete, embracing the belief that if you have a body, you are an athlete. The corporation includes a family of brands like Converse and Jordan, each with its distinct heritage and loyal customer base. Nike’s commitment to innovation is evident in its product development, with a focus on technological advances that enhance athletic performance and comfort.


As a leader in the sportswear industry, Nike also emphasizes sustainability and social responsibility in its business practices. Through its diverse product lines and vast global presence, Nike continues to set trends, foster a culture of fitness and sport, and move forward with a spirit of competitive excellence.


Nike Inc. (NKE) Stock Analysis


Market Fundamentals:


Market Capitalization: At $152.75 billion, NIKE, Inc. is a large-cap stock, which usually implies stability and a well-established position in the market.

Price-Earnings (PE) Ratio: With a trailing PE of 29.48 and a forward PE of 28.25, the company is valued above the market average, indicating that investors expect higher growth compared to the broader market.

Dividends: The company has a consistent dividend yield of 1.47%, reflecting a commitment to returning value to shareholders. The consistent growth in dividends over the years appeals to value investors looking for income-generating stocks.


Financial Health:


Revenue: NIKE’s revenue stands at $51.54 billion with consistent year-over-year growth, a positive sign of the company’s ability to expand its business.

Net Income: With a net income of $5.30 billion and a profit margin of 10.28%, NIKE demonstrates strong profitability, essential for long-term value investment.

Gross Margin: At 43.96%, the gross margin is robust, suggesting good control over production and supply chain costs.

Operating Cash Flow and Free Cash Flow: The company’s operating cash flow of $7.23 billion and a healthy free cash flow of $6.31 billion indicate solid operational efficiency and financial flexibility.

Return on Equity (ROE): An ROE of 37.40% is outstanding, highlighting the company’s efficacy in generating profits from its shareholders’ equity.


Balance Sheet Analysis:


Debt Position: The company has a net debt position of -$2.25 billion, which is relatively manageable given its earnings and cash flow.

Liquidity: With a current ratio of 2.74, NIKE’s liquidity position is strong, suggesting that it can easily meet its short-term obligations.


Stock Performance:


Volatility: A beta of 1.1 implies that NIKE’s stock volatility is slightly higher than the market average, which may indicate higher potential returns but also higher risk.

Price Stability: The 52-week price change shows a decline of -19.74%, reflecting market corrections or potentially undervalued stock.

Analyst Ratings: A consensus “Buy” rating with a price target of $121.07 suggests optimism about the stock’s future performance, supporting a positive outlook for value investors.


Company and Sector Analysis:


Brand Strength: NIKE is a leader in the global athletic footwear and apparel market, which provides a competitive advantage.

Innovation and Market Trends: Continuous product innovation and adaptation to market trends, like the shift to e-commerce and direct-to-consumer sales, underpin NIKE’s strategic direction.

Global Reach: The company’s worldwide presence diversifies risk and allows capitalization on growth in emerging markets.




From a value investing standpoint, NIKE, Inc. exhibits several characteristics of a strong investment. It has a solid market position, a history of profitability, strong cash flow generation, and a sound liquidity position. While the stock’s PE ratio is higher than the market average, which may raise questions about its current valuation, the company’s financial health and growth prospects may justify this premium. Moreover, the consistent dividend payments and buyback programs are indicative of a shareholder-friendly policy.


Value investors may consider NIKE a potential investment, particularly if they believe in the company’s ability to sustain its growth and maintain profitability. The recent decline in stock price could represent a buying opportunity, provided the market has overcorrected for short-term concerns, and the long-term business fundamentals remain strong. However, it would be prudent for investors to also assess the potential risks, including market saturation in the athletic apparel industry and increasing competition, before making an investment decision.



This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.

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