Nike Stock at 12-Year Low: Should You Buy Before Oct. 1 Earnings?

Nike (NKE) is set to report first-quarter fiscal 2027 earnings on Oct. 1, but the stock has already plunged to a 12-year low, down nearly 80% from its 2021 peak. The decline accelerated after the company was removed from the S&P 100 index in September, a stark reversal for a brand once considered a cornerstone of consumer discretionary portfolios.

The trouble began earlier this decade when Nike pivoted exclusively to online sales, abandoning valuable shelf space at retailers. That misstep gave competitors like On Holding and adidas an opening to capture market share and build their own brand loyalty. Although Nike eventually reversed the strategy, the damage was done—shelf space is hard to reclaim, and consumers had already discovered alternatives.

Financially, the picture is equally grim. Fiscal 2026 revenue was $46.4 billion, virtually flat from the prior year, while higher taxes pushed net income down 3% to $3.1 billion. Analysts now expect a 3% revenue decline in the upcoming quarter and a 2% drop for the full fiscal year 2027, signaling that a turnaround is not imminent.

The stock's low valuation—a P/E of 17 and a 4.6% dividend yield—might tempt bargain hunters, but those metrics are less meaningful without growth. Worse, Nike paid $2.4 billion in dividends in fiscal 2026 while generating only $2.2 billion in free cash flow, meaning the payout is not fully covered. That raises concerns about financial flexibility and even the company's future in the Dow Jones Industrial Average.

Nike's decline is not just a company-specific issue; it reflects a broader shift in the athletic apparel market. Competitors like On and adidas have successfully chipped away at Nike's dominance, and their momentum could continue even if Nike stabilizes. For investors, this means the recovery story is not just about Nike executing better—it's about whether it can win back customers who have found new favorites.

The upcoming earnings report on Oct. 1 is a critical test. If Nike misses revenue expectations or lowers guidance further, the stock could revisit new lows. Conversely, any sign of improvement might spark a short-term rally, but without a clear path to sustainable growth, such rallies are likely to be sold into.

Moreover, Nike's dividend, once considered safe, is now a potential risk. With payouts exceeding free cash flow, the company may need to cut the dividend or take on debt to maintain it. A dividend cut would likely trigger further selling, especially among income-focused investors.

Finally, Nike's removal from the S&P 100 means index funds tracking that index had to sell shares, adding downward pressure. While that effect is temporary, it underscores the company's diminished standing in the large-cap universe. Until Nike proves it can reignite growth, the stock remains a value trap rather than a value play.