A Look at Nike (NKE) Valuation Following Its Latest Dividend Increase and Ongoing Transformation Efforts

Nike (NKE) just announced a 3% increase to its quarterly dividend, marking another year in its cycle of consistent payout growth. This decision signals the company’s ongoing financial strength, even as it faces heightened competition and shifting consumer trends.

See our latest analysis for NIKE.

After its recent 3% dividend hike, NIKE’s story grows more complex. While this move highlights confidence in its turnaround strategy, the share price tells a different tale, falling nearly 21% over the last three months and logging a -17% total shareholder return over the past year. This suggests fading momentum as investors weigh ongoing headwinds and the uncertain pace of recovery.

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Although NIKE maintains its long-term dividend track record and shows continued profitability, its shares now trade well below analyst targets. This situation raises the question: does it create a buying window for patient investors, or is future growth already factored in?

Most Popular Narrative: 35% Undervalued

According to Zwfis, the current market price leaves significant room for upside if projected growth materializes. Comparing NIKE’s last close at $62.80 with a fair value narrative of $96.60 presents a striking contrast in sentiment.

With pretty conservative estimates I am seeing Nike hitting at least $100 roughly in 3 years. However this is with a revenue growth of 2 percent. I believe that leadership can help get that number closer to 5 percent within the next 2 years, and that also is a conservative number. Nike is a staple brand that has been in a rough patch as a result of poor decisions within the company. However I really do feel like they can turn things around.

Read the complete narrative.

Is NIKE really primed for a breakout? The math behind this narrative relies on a step change in revenue momentum and impressive profitability levels. Wondering which game-changing forecast drives that huge upside? Find out what number changes everything in this bullish scenario.

Result: Fair Value of $96.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering consumer weakness or leadership execution missteps could stall the turnaround and dampen NIKE’s valuation recovery story.

Find out about the key risks to this NIKE narrative.

Another View: The Price-to-Earnings Perspective

NIKE’s current price-to-earnings ratio stands at 32.1 times, which is significantly higher than both the US Luxury industry’s 19.7 times and the peer average of 26.6 times. The fair ratio here is closer to 24.8 times, suggesting NIKE looks pricey on this measure and the stock could face valuation pressure if sentiment shifts. Does this premium indicate a high-quality moat, or is it simply too steep for what lies ahead?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own NIKE Narrative

If you want to draw your own conclusions or challenge the prevailing outlook, you can dive into the data and craft a custom narrative in just minutes: Do it your way.

A great starting point for your NIKE research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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