Is Nike Fairly Priced After Direct-to-Consumer Revamp and Recent Share Slide?

• Wondering if NIKE's stock is a hidden gem or if the price tag outweighs the potential? You are not alone; many investors are rethinking what defines value in today's market.
• Despite a 2.4% uptick in the past week, NIKE shares are down 12.7% year-to-date and have fallen 16.5% over the past year, signaling shifting investor sentiment around the company's growth prospects and perceived risks.
• Recent news has highlighted NIKE’s ongoing efforts to revamp its direct-to-consumer strategy and streamline global operations, both aimed at fueling future growth. Industry analysts are watching how these moves, including targeted cost cuts and a renewed marketing push, may spark a turnaround or signal more cautious optimism among investors.
• Looking at the numbers, NIKE scores 0 out of 6 on our undervaluation checks, raising questions about whether the current price offers a fair entry point. We will break down how various valuation methods stack up for NIKE, and reveal an even smarter way to judge value by the end of this article.

NIKE scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: NIKE Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and then discounting those amounts back to today's dollars. This approach helps investors assess what the stock is truly worth based on the company's ability to generate cash over time.

For NIKE, the current Free Cash Flow stands at approximately $2.85 billion. Analysts forecast ongoing growth, with projections reaching about $5.89 billion in Free Cash Flow by 2030. These forecasts rely on analyst estimates for the next five years, followed by extended trends provided by Simply Wall St for further years out.

After applying the DCF model and discounting these projected figures, the estimated intrinsic value per share comes to $61.94. Compared to the market price, this implies that NIKE shares are about 3.9% overvalued. This margin is quite narrow, which means the stock price is generally aligned with its fundamental value based on expected future cash flows.

Result: ABOUT RIGHT

NIKE is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for NIKE.

Approach 2: NIKE Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most commonly used valuation metrics for profitable companies like NIKE because it helps investors gauge whether a stock is priced fairly in relation to its earnings power. Generally, companies with higher growth expectations or lower risk merit higher PE ratios. Those facing slower growth or greater uncertainty typically trade at lower multiples.

NIKE currently trades at a PE ratio of 32.8x, above the Luxury industry average of 20.2x and its peer average of 27.8x. At first glance, this suggests NIKE is being valued at a premium relative to both its industry and comparable peers. However, these basic comparisons do not capture key factors such as NIKE’s global brand strength, robust profit margins, scale, and unique growth profile.

Simply Wall St’s proprietary “Fair Ratio” offers another perspective. This Fair Ratio, calculated as 24.8x for NIKE, considers not just earnings growth but also factors such as profit margin, market cap, specific industry trends, and risk outlook. As a result, it provides a more comprehensive, tailored benchmark for what could be a sensible valuation multiple for NIKE specifically, instead of relying only on generic averages.

Comparing NIKE’s current PE of 32.8x to the Fair Ratio of 24.8x, the stock appears somewhat overvalued based on this metric alone.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your NIKE Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple yet powerful tool that lets you describe your perspective on a company. It outlines the story behind the numbers by attaching your own assumptions on fair value, future revenue, earnings, and margins.

Rather than relying only on static ratios or consensus price targets, a Narrative connects your understanding of NIKE’s business. It incorporates strategy, risks, advantages, and future opportunities into a detailed forecast and value calculation. This makes your investment thesis more transparent and grounded in real data, not just gut feeling or headline news.

Narratives are easy to create and share on Simply Wall St’s Community page, where millions of investors refine, compare, and update their investment outlooks in real time. You can quickly compare your Narrative’s fair value with the current share price, helping you decide when to buy, hold, or sell based on your conviction.

As new news or earnings are released, Narratives update automatically, offering ongoing value without manual recalculation. For NIKE, some investors see fair value as high as $120, betting on a sharp turnaround, while others believe it could be closer to $38 if challenges persist. This demonstrates how Narratives support every viewpoint and empower smarter investment decisions.

Do you think there's more to the story for NIKE? Head over to our Community to see what others are saying!

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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