Nike
NKE
$38.59
-2.45%
Nike, Inc. designs, markets, and distributes athletic footwear, apparel, and equipment globally, operating through its Nike, Jordan, Converse, ACG, and NikeSkims brands, with footwear generating roughly two-thirds of sales and apparel about 30%. As the world's largest sports performance and lifestyle merchandiser, Nike is a category-defining global brand with unmatched scale, sponsorship leverage, and a vertically integrated digital ecosystem spanning more than 40 countries, though it now faces intense competition from On, Hoka, Adidas, and resurgent athleisure players. The current investor narrative has turned sharply negative: a Q1 FY2027 revenue miss, a guidance cut implying up to a 50% earnings decline for the fiscal year, deepening Greater China weakness, and Converse softness have reframed Nike from a premium compounder into a contested turnaround story. Debate now centers on whether the iconic brand, depressed valuation, and wholesale re-expansion can stabilize the business before margin compression and a stretched dividend payout erode the bull case, with sell-side sentiment split between patient value hunters and those calling the stock a value trap.…
NKE
Nike
$38.59
Related headlines
Investment Opinion: Should I buy NKE Today?
Rating: Hold. Nike is a high-quality global franchise trading at a genuine trough valuation (1.47x PS, 1.31x EV/Sales, 4.58x PB versus 5-6x PS and 8-12x PB historically), but the fundamental trajectory is still deteriorating and the $36.50 consensus target sits roughly 5.1% below the $38.48 price, so there is no margin of safety yet for new capital. The core thesis is that the market has already discounted a severe earnings reset, but not yet confirmed a revenue bottom — and until that confirmation arrives, the stock is a paid-to-wait value proposition rather than a compelling buy. Supporting evidence is mixed but tilts cautious. On the positive side, the 21.87x trailing PE sits in the lower-middle of its multi-year 15.9x-108x band, the 3.53% dividend yield is attractive, ROE of 20.9% and a 42.9% gross margin remain respectable, and the $60 high analyst target implies roughly +56% upside if a turnaround materializes. Against that, revenue fell 4.33% year-over-year to $11.213 billion in Q1 FY2027, gross margin compressed 636 basis points sequentially to 42.79% from 49.15%, net margin thinned to 6.35%, TTM free cash flow of $2.105 billion is thin against a $68.1 billion market cap, and the forward PE of 24.71x exceeds the trailing 21.87x — an inversion that means investors are paying a premium for trough earnings. The biggest risks that could invalidate any recovery thesis are a second guidance cut (management already guided to high single-digit revenue declines and up to a 50% earnings decline), a dividend cut given the 77.4% payout ratio against negative Q1 FCF of -$64 million, and continued share loss in Greater China and footwear ($7.178 billion of the quarter) to On, Hoka, and Adidas. This Hold would upgrade to Buy if revenue growth turns positive or gross margin stabilizes back above 45% with the consensus target moving above the current price, and would downgrade to Sell if gross margin breaks below 40% or the dividend is cut. Valuation verdict: the stock is cheap versus its own history but only roughly in line to modestly expensive versus apparel peers on a quality-adjusted basis, making it fairly valued at best — not yet undervalued enough to compensate for the execution risk.
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NKE 12-Month Price Forecast
The forward view is genuinely balanced: valuation is at multi-year troughs (1.47x PS versus 5-6x historically) and the 3.53% yield pays investors to wait, but the fundamental trajectory has not bottomed and the consensus target sits below the current price, capping near-term upside. The 55% base case assumes a muddle-through range of $33-$40 as revenue declines moderate and margins stabilize near the low-40s, while the 25% bear case carries a -17% to -51% downside if the dividend is cut or guidance is reduced again. The 20% bull case requires a confirmed revenue bottom plus margin recovery toward the mid-40s to justify the $52-$60 range. I would upgrade to bullish on evidence of positive revenue growth or gross margin above 45% with the consensus target moving above the price, and downgrade to bearish if gross margin breaks below 40% or the dividend is cut. Given the wide $19-$60 target dispersion and the absence of recent upgrades, conviction is medium at best until the next earnings report clarifies the trajectory.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Nike's 12-month outlook, with a consensus price target around $36.45 and implied upside of -5.6% versus the current price.
Average Target
$36.45
43 analysts
Implied Upside
-5.6%
vs. current price
Analyst Count
43
covering this stock
Price Range
$19 - $60
Analyst target range
Coverage is broad with 37 analysts, but sentiment is decidedly cautious: 10 rate Buy, 25 Hold, and 8 Sell, yielding a consensus recommendation of Hold and a recommendation mean of 2.88 (where higher values skew bearish). The average price target of $36.50 sits below the current $38.48 price, implying roughly -5.1% downside to consensus, a rare configuration that signals analysts see the recent one-month rally as overextended relative to fundamentals. The consensus leans neutral-to-bearish, consistent with the revenue miss, guidance cut, and China weakness that dominate recent coverage. The target range is extremely wide, from a low of $19.00 to a high of $60.00, a spread of more than 3x that signals unusually high uncertainty and weak conviction. The $60 high target would require a full turnaround with multiple expansion and earnings recovery toward the $3.00 estimated EPS average, while the $19 low discounts a prolonged decline with margin compression, dividend cuts, and continued share loss to competitors. Institutional ratings show a clear pattern of caution rather than upgrade momentum: recent actions include Morgan Stanley and BNP Paribas maintaining Underweight/Underperform stances, Goldman Sachs, UBS, Citigroup, and Telsey holding Neutral/Market Perform, while only Guggenheim, Barclays, and BTIG remain constructive with Buy/Overweight ratings. The wide dispersion and absence of recent upgrades indicate that the sell-side is waiting for evidence of a revenue bottom before turning more positive, and the below-price average target suggests the risk/reward remains unfavorable until fundamental stabilization is confirmed.
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Bulls vs Bears: NKE Investment Factors
The bear case currently holds stronger evidence: revenue is contracting 4.33% year-over-year, gross margin compressed 636 basis points sequentially, guidance implies up to a 50% earnings decline, and the $36.50 consensus target sits below the $38.48 price. The bull case rests almost entirely on valuation and brand equity — 1.47x sales versus 5-6x historically, a 3.53% yield, and a $60 high target — rather than on any confirmed fundamental stabilization. The single most important tension is whether Nike's wholesale re-expansion and brand reset can bend revenue back to growth before margin compression and a stretched 77.4% payout force a dividend cut; a confirmed revenue bottom would validate the value thesis, while another guidance cut would confirm the value-trap narrative. Until then, the risk/reward is asymmetric to the downside despite the iconic franchise.
Bullish
- Iconic brand at trough valuation: Nike trades at 1.47x sales and 1.31x EV/Sales, far below the 5.17x-6.21x PS multiples recorded in recent quarters, and its 4.58x PB sits well under the 8-12x range seen through 2022-2024. The 21.87x trailing PE is in the lower-middle of its own multi-year band of roughly 15.9x-108x, meaning the market has already priced in substantial deterioration.
- Analyst high target implies 56% upside: The sell-side target range spans $19 to $60, and the $60 high target represents roughly +56% from the current $38.48 price. That bull scenario requires earnings recovery toward the $3.00 estimated EPS average plus multiple expansion, which is plausible for a brand with 20.9% ROE and $68.1 billion market cap.
- Short-term momentum has inflected: The stock is up 13.61% over the past month versus a -1.99% decline for SPY, a +15.60 percentage point relative strength swing off the October trough near $33.87. This oversold bounce suggests sellers are exhausted near the $31.97 52-week low and early mean-reversion buyers are stepping in.
- Balance sheet and liquidity cushion: Debt-to-equity of 0.74 and a current ratio of 1.96 signal adequate liquidity, with $6.903 billion of cash funding operations and $199 million of quarterly capex internally. ROE of 20.9% and a 42.9% gross margin remain respectable for apparel, giving management room to execute a turnaround without a solvency scare.
Bearish
- Guidance implies up to 50% earnings decline: Management guided to high single-digit revenue declines and up to a 50% earnings decline for the fiscal year after Q1 FY2027 revenue of $11.213 billion missed and fell 4.33% year-over-year. The forward PE of 24.71x exceeds the trailing 21.87x, an inversion that means investors are paying a premium for trough earnings that may not recover quickly.
- Margins compressing sharply: Gross margin fell to 42.79% in Q1 FY2027 from 49.15% in Q4 FY2026, a 636 basis point sequential compression, while net margin thinned to 6.35% from 9.74% and operating margin to 7.92% from 11.98%. Discounting, input costs, and tariff pressure are eroding the pricing power that historically defined Nike's premium model.
- Consensus target below current price: The $36.50 average analyst target sits below the $38.48 current price, implying roughly -5.1% downside, a rare configuration that signals the recent rally is overextended relative to fundamentals. With 25 Hold and 8 Sell ratings against only 10 Buy, the recommendation mean of 2.88 skews bearish and no recent upgrades have materialized.
- Free cash flow and dividend strain: TTM free cash flow of just $2.105 billion is weak against a $68.1 billion market cap, and Q1 FY2027 FCF was negative at -$64 million on operating cash flow of only $135 million. The 77.4% payout ratio combined with this FCF squeeze raises the risk of a dividend cut that several commentators have flagged.
NKE Technical Analysis
Nike is locked in a sustained, punishing downtrend, with the stock down 38.58% over the past year and 39.19% year-to-date, dramatically underperforming the S&P 500's +10.39% one-year return for a relative strength gap of -48.97 percentage points. At $38.48, the shares sit at roughly 17.7% of the 52-week range between a $31.97 low and $69.14 high, a positioning that reflects capitulation rather than momentum and places the stock deep in falling-knife territory despite its blue-chip pedigree. The 54.58% max drawdown underscores how severe the de-rating has been for a mega-cap consumer staple-adjacent name. Short-term momentum, however, has turned sharply positive and diverges from the annual trend: the stock is up 13.61% over the past month versus a -1.99% decline for SPY, a +15.60 percentage point relative strength swing, even as the 3-month change remains -9.35% and the 6-month change -13.35%. This one-month surge off the October lows near $33.87 suggests an oversold bounce or early mean-reversion attempt, but it has not yet reversed the intermediate downtrend, and the divergence between a strong 1-month and weak 3-month/1-year trend argues for caution until higher lows are confirmed. Key technical levels are clear: support rests at the $31.97 52-week low, with the recent $33.87 October trough as an intermediate floor, while resistance sits at the $69.14 52-week high, with nearer supply likely in the $42-$45 zone where the stock traded in mid-2026. A breakout above that intermediate resistance would signal a genuine trend reversal, whereas a breakdown below $31.97 would confirm the bear case and likely trigger further momentum selling; with a beta of 1.031, the stock moves roughly in line with the market, so the elevated volatility here is idiosyncratic rather than systemic, meaning position sizing should account for company-specific headline risk around guidance and earnings.
Beta
1.03
1.03x market volatility
Max Drawdown
-54.6%
Largest decline past year
52-Week Range
$32-$69
Price range past year
Annual Return
-37.6%
Cumulative gain past year
| Period | NKE Return | S&P 500 |
|---|---|---|
| 1m | +12.3% | -5.4% |
| 3m | -7.5% | -4.9% |
| 6m | -12.6% | -0.3% |
| 1y | -37.6% | +9.7% |
| ytd | -39.0% | +7.8% |
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NKE Fundamental Analysis
Nike's revenue trajectory is contracting: Q1 FY2027 revenue of $11.213 billion fell 4.33% year-over-year, and the multi-quarter trend shows persistent pressure, with revenue sliding from $12.427 billion in Q2 FY2026 to $11.279 billion in Q3, $10.972 billion in Q4, and now $11.213 billion, while management guided to high single-digit declines for the fiscal year. By segment, footwear at $7.178 billion and apparel at $4.009 billion dominate the mix, with other products at just $26 million, meaning the core footwear franchise bears the brunt of the slowdown, compounded by sharp declines in Greater China and Converse. The growth trend implies a business still searching for a bottom, and until revenue stabilizes, the investment case rests on brand recovery rather than current fundamentals. Profitability is deteriorating meaningfully: Q1 FY2027 net income of $712 million produced a thin 6.35% net margin and 7.92% operating margin, down from a 9.74% net margin and 11.98% operating margin in Q4 FY2026, while gross margin compressed to 42.79% from 49.15% the prior quarter. The gross margin of 42.9% remains respectable for apparel, but the sequential 636 basis point compression and the guidance for up to a 50% earnings decline signal that discounting, higher input costs, and tariff pressure are eroding the pricing power that historically defined Nike's premium model. The company remains solidly profitable, but the trajectory is toward margin compression rather than expansion, which is the central risk to the earnings recovery thesis. The balance sheet offers some cushion but is not without strain: debt-to-equity stands at 0.74, the current ratio at 1.96 signals adequate liquidity, and ROE of 20.9% remains healthy, yet free cash flow TTM of just $2.105 billion is weak relative to a $68.1 billion market cap, and Q1 FY2027 free cash flow was actually negative at -$64 million on operating cash flow of only $135 million. The dividend payout ratio of 77.4% against a 3.53% yield is elevated and, combined with the FCF squeeze, raises the risk of a dividend cut that several commentators have flagged. With cash of $6.903 billion and continued capex of $199 million in the quarter, Nike can fund operations internally, but the combination of negative quarterly FCF, a stretched payout, and declining earnings means financial flexibility is narrowing and external financing or dividend discipline may be required if the downturn persists.
Quarterly Revenue
$11.2B
2026-08
Revenue YoY Growth
-4.3%
YoY Comparison
Gross Margin
42.8%
Latest Quarter
Free Cash Flow
$2.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is NKE Overvalued?
Because Nike remains profitable with trailing net income positive, the PE ratio is the appropriate primary metric: the stock trades at 21.87x trailing earnings but 24.71x forward earnings, an unusual inversion where the forward multiple exceeds the trailing multiple, implying the market expects earnings to decline rather than grow. That gap is consistent with management's guidance for up to a 50% earnings decline and signals that investors are paying a premium for depressed, trough-level forward earnings, a classic hallmark of a value trap if the recovery does not materialize. The PEG ratio of -6.78 is not meaningful given negative growth expectations, reinforcing that earnings-based valuation is currently unreliable. Against its own sector and history, Nike's valuation has compressed dramatically: the PS ratio of 1.47 and EV/Sales of 1.31 are far below the 5.17x PS and 6.21x PS recorded in recent quarters, and the PB ratio of 4.58 sits well under the 8-12x range seen through 2022-2024. The trailing PE of 21.87x compares with historical PE readings ranging from roughly 15.9x to 108x over the past several years, placing the current multiple in the lower-middle of its own band, while the forward PE of 24.71x versus an estimated EPS average of $3.00 implies the market is already discounting a sharp earnings reset. Relative to a typical consumer cyclical/apparel peer group trading in the high-teens to low-20s PE range, Nike's 21.87x trailing multiple is roughly in line to modestly above peers, but its 6.35% net margin and 7.92% operating margin are below its own historical norms, meaning the multiple is not obviously cheap on a quality-adjusted basis. The stock is near the bottom of its historical valuation range, which could represent a genuine value opportunity if the turnaround takes hold, but the combination of contracting revenue, compressing margins, and a forward multiple above the trailing multiple suggests the market is pricing in continued deterioration rather than a swift recovery.
PE
21.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 16x~50x
vs. Industry Avg
21.8x
Industry PE ~21.8x*
EV/EBITDA
15.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are mounting on multiple fronts. Revenue fell 4.33% year-over-year to $11.213 billion in Q1 FY2027, with management guiding to high single-digit declines and up to a 50% earnings decline for the fiscal year, while gross margin compressed 636 basis points sequentially to 42.79% from 49.15%. Free cash flow TTM of $2.105 billion is thin against a $68.1 billion market cap, and Q1 FY2027 FCF was negative at -$64 million on operating cash flow of just $135 million, leaving the 77.4% payout ratio exposed to a dividend cut. Concentration in footwear ($7.178 billion of the $11.213 billion quarter) and in Greater China means a single product category or geography can drive outsized earnings volatility. Market and competitive risks center on valuation compression and share loss. The forward PE of 24.71x exceeds the trailing 21.87x, meaning the market pays a premium for depressed earnings, and a PEG of -6.78 confirms earnings-based valuation is unreliable while growth is negative. Competition from On, Hoka, Adidas, and resurgent athleisure players is eroding Nike's premium positioning, and the -48.97 percentage point one-year relative strength gap versus the S&P 500 shows the de-rating is structural. With a beta of 1.031 the stock moves roughly in line with the market, so the elevated volatility is idiosyncratic — headline risk around guidance, China, and tariffs — rather than systemic, and sector rotation away from consumer discretionary would add further pressure. The worst-case scenario is a chain in which holiday and spring orders confirm continued revenue decline, gross margin fails to stabilize near 42%, and management cuts the dividend, triggering forced selling by income funds and a downgrade cycle. In that path the stock would retest its $31.97 52-week low, roughly -17% from $38.48, and the $19 analyst low target implies a far steeper -51% drawdown if margin compression and share loss persist. The 54.58% max drawdown already recorded shows how severe the de-rating can be for a mega-cap consumer name, so position sizing should assume a realistic downside of -17% to -30% before any fundamental floor is found.
FAQ
The most severe risk is financial: a 77.4% dividend payout ratio combined with negative Q1 FY2027 free cash flow of -$64 million and TTM FCF of just $2.105 billion against a $68.1 billion market cap makes a dividend cut plausible, and several commentators have flagged it explicitly. Second is the earnings and margin trajectory — revenue fell 4.33% year-over-year to $11.213 billion, gross margin dropped to 42.79% from 49.15% sequentially, and management guided to high single-digit revenue declines with up to a 50% earnings decline, so a second guidance cut would likely push consensus EPS below the $3.00 average. Third is competitive and geographic concentration: footwear accounts for $7.178 billion of the $11.213 billion quarter and Greater China and Converse are declining sharply, leaving the core franchise exposed to share loss from On, Hoka, and Adidas. Fourth is valuation and sentiment risk — with a beta of 1.031 the stock tracks the market, but the -48.97 percentage point one-year relative strength gap versus the S&P 500 and the below-price $36.50 consensus target show the de-rating is idiosyncratic and could extend if no upgrades materialize.
The base case carries 55% probability and a $33-$40 range, assuming revenue declines moderate to low single digits, gross margin holds in the 41%-44% band, and the dividend is maintained, leaving the stock range-bound around the $36.50 consensus target. The bear case at 25% probability targets $19-$32, driven by a second guidance cut, gross margin breaking below 40%, and a dividend cut that forces income funds to sell, retesting the $31.97 52-week low and potentially approaching the $19 analyst low. The bull case at 20% probability targets $52-$60 and requires a credible revenue bottom with North America returning to growth, Greater China stabilizing, and gross margin recovering toward the mid-40s, approaching the $60 high target. The base case is most likely because there are no near-term catalysts and the average target sits below the current price, so the key assumption is that revenue stops deteriorating without re-accelerating. Note the $19-$60 target dispersion is more than 3x, signaling unusually low sell-side conviction.
The answer depends on the metric: on sales and book value Nike is cheap, but on earnings it is not. The PS ratio of 1.47 and EV/Sales of 1.31 are far below the 5.17x-6.21x PS multiples recorded in recent quarters, and the 4.58x PB sits well under the 8-12x range of 2022-2024, while the 21.87x trailing PE is in the lower-middle of its own multi-year 15.9x-108x band. However, the forward PE of 24.71x is above the trailing multiple — an inversion that signals the market expects earnings to fall, consistent with guidance for up to a 50% decline — and the PEG of -6.78 is meaningless because growth is negative. Against apparel peers trading in the high-teens to low-20s PE range, Nike's 21.87x is roughly in line to modestly above, and its 6.35% net margin and 8.19% operating margin are below its own historical norms, so it is not obviously cheap on a quality-adjusted basis. The market is therefore pricing continued deterioration rather than a swift recovery: the stock is fairly valued at best versus history and only modestly discounted versus peers, which is why the consensus target of $36.50 sits below the current price.
The risk/reward is not yet compelling at $38.48: the $36.50 consensus target implies roughly -5.1% downside, and the forward PE of 24.71x exceeds the trailing 21.87x, meaning investors pay a premium for earnings that management has guided to fall as much as 50%. The upside case is real — the $60 high target implies about +56% and the 1.47x PS ratio is a fraction of the 5-6x historical norm — but it requires a confirmed revenue bottom that has not appeared, with revenue down 4.33% year-over-year and gross margin compressing 636 basis points sequentially to 42.79%. The biggest downside risk is a dividend cut given the 77.4% payout ratio against negative Q1 free cash flow of -$64 million, which could force income funds to sell and drive a retest of the $31.97 low, roughly -17%. It is a reasonable buy only for patient investors with a multi-year horizon who can tolerate a -17% to -30% drawdown and who accumulate in tranches near the low-$30s; for everyone else, waiting for evidence of positive revenue growth or gross margin above 45% is the higher-probability entry.
Nike is a long-term holding candidate, not a short-term trade: with revenue contracting, gross margin compressing, and no confirmed bottom, earnings visibility is poor and the 1-month +13.61% bounce off the $33.87 October trough looks like mean reversion rather than a trend reversal, especially with the 3-month change at -9.35% and the 1-year change at -38.58%. The 3.53% dividend yield pays investors to wait, but the 77.4% payout ratio and negative quarterly free cash flow mean the income component is not dependable, so the return must come from multiple re-rating and earnings recovery rather than yield. Volatility is high — a 54.58% max drawdown and a 52-week range of $31.97 to $69.14 — while beta of 1.031 means the risk is company-specific, so position sizing matters more than market timing. A minimum holding period of 2-3 years is appropriate, ideally built in tranches near the low-$30s, with a review triggered by any dividend action or a gross margin break below 40%; short-term traders should wait for a confirmed higher low above $33.87 with volume before engaging.