If you have been watching Nike (NKE), this week’s post-earnings rally is tough to ignore. Despite quarterly results showing a 12% slide in revenue and profits down 86%, the company outperformed already lowered expectations, setting off a spirited 15% jump in the stock. Leadership under new CEO Elliott Hill is shaking things up by sharpening Nike’s focus on premium products and cutting back on discounted lines in an effort to boost margins, while major names on Wall Street are signaling renewed confidence in the turnaround story.
This burst of optimism follows a stretch where Nike shares have lagged the market, down 3% over the last year and showing negative returns over three and five years. However, recent momentum is building. In the past three months, the stock has climbed 18%, fueled by restructuring moves, holiday order strength, and continued belief that a leaner, refocused Nike could return to steady growth. Leadership changes and workforce adjustments reinforce the message that this is not business as usual.
After this rollercoaster, investors face a familiar question: does the recent jump mark a real turning point, or is the stock’s rebound simply catching up to expectations for a future comeback?
Most Popular Narrative: 15.5% Undervalued
According to the leading narrative, Nike is currently undervalued relative to its fair value estimate, due to expectations of accelerating earnings and profit margins as the company shifts to a more direct-to-consumer model.
“Nike is prioritizing Nike.com, SNKRS, and flagship stores, improving margins and reducing reliance on wholesalers. Innovation in Running & Performance, including the launch of Alphafly 3, Vaporfly 4, and next-generation sportswear, can drive higher demand.”
Curious what bold bets could supercharge Nike’s next wave of growth? The narrative hinges on a combination of margin expansion, strategic innovation, and a future profit multiple that few expect. Interested in how this mix results in a double-digit undervaluation? There is a playbook here that is breaking from tradition. Discover exactly what is driving this upside.
Result: Fair Value of $87.90 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.However, rising competition from emerging brands and changing consumer tastes toward niche labels remain real challenges that could test Nike’s turnaround momentum.
Find out about the key risks to this NIKE narrative.Another View: Industry Comparison Raises Questions
While the earlier narrative finds Nike undervalued, a comparison with the wider industry shows the stock actually trades at a premium to average. It raises the question of whether the market is expecting more than just a steady comeback.
See what the numbers say about this price — find out in our valuation breakdown.Build Your Own NIKE Narrative
If you want a different perspective or enjoy digging into the numbers on your own, you can craft your own analysis in just a few 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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