Nike (NKE): Assessing Valuation After Recent Weak Stock Performance

NIKE (NKE) shares have been trending lower recently, slipping nearly 7% over the past month and down 13% over the past 3 months. Investors have been watching for signs of renewed momentum in the stock.

See our latest analysis for NIKE.

NIKE’s share price has lost ground steadily this year, with momentum fading as recent declines pushed the stock to $64.90, leaving the one-year total shareholder return at -14%. Investors appear cautious as the company’s growth narrative faces renewed scrutiny and shifting risk perceptions.

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The key question now is whether NIKE's recent underperformance has made the stock an undervalued opportunity, or if the market has already accounted for all future growth prospects in its current price.

Most Popular Narrative: 32.8% Undervalued

NIKE's closing price of $64.90 falls well below the narrative fair value of $96.60, with the narrative envisioning substantial upside over the next few years. This perspective stands in stark contrast to the recent trading trend and signals that some investors see untapped value in the stock’s current weakness.

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%. I believe that leadership can help get that number closer to 5% within the next 2 years however, and that also is a conservative number.

Read the complete narrative.

What’s fueling this bullish outlook? One fundamental driver stands out, but you might be surprised at which key assumption makes such a big difference to the fair value. If you want to uncover which quantitative factors tip the scales so much in NIKE’s favor, you’ll need to read on for the full narrative breakdown.

Result: Fair Value of $96.60 (UNDERVALUED)

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

However, ongoing weak consumer demand and leadership transitions could continue to challenge NIKE's recovery, potentially delaying any return to sustained growth.

Find out about the key risks to this NIKE narrative.

Another View: Not All Models Agree

While some see upside, a look at NIKE’s price-to-earnings ratio paints a more cautious picture. The company trades at 33.1 times earnings, higher than both the US Luxury industry average of 19.1x and the peer average of 30.9x. Even compared to its fair ratio of 27.2x, the stock appears expensive. For investors, this gap could signal valuation risk if the market’s expectations reset.

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

Build Your Own NIKE Narrative

If you see things differently or want to form your own opinion, you can easily create your own narrative using the data in just a few minutes. So why not 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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