At US$86.52, Is It Time To Put NIKE, Inc. (NYSE:NKE) On Your Watch List?

Today we're going to take a look at the well-established NIKE, Inc. (NYSE:NKE). The company's stock led the NYSE gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at NIKE’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for NIKE

What Is NIKE Worth?

According to our valuation model, NIKE seems to be fairly priced at around 19.89% above our intrinsic value, which means if you buy NIKE today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $72.17, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because NIKE’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will NIKE generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of NIKE, it is expected to deliver a negative earnings growth of -0.6%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? NKE seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on NKE for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on NKE should the price fluctuate below its true value.

It can be quite valuable to consider what analysts expect for NIKE from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in NIKE, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.