NIKE (NKE): Examining Valuation Following Recent Share Price Weakness and Market Trends

NIKE (NKE) shares have slipped in recent trading, with the stock down about 1% today and off 4% over the past month. Investors are keeping an eye on how these moves might reflect broader concerns regarding consumer trends and competition in the sportswear market.

See our latest analysis for NIKE.

NIKE’s share price has struggled to regain momentum this year, even after some high-profile launches and sponsorship news, with the 1-year total shareholder return now down nearly 10%. That hints at lingering investor caution as the brand works through a more challenging global retail environment.

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With shares trading well below analyst price targets and solid earnings growth on record, the question remains: is NIKE currently a bargain for value seekers, or are investors already factoring in its next chapter?

Most Popular Narrative: 26.3% Undervalued

With the last close at $71.17 and the narrative’s fair value estimate much higher, appetite is building among investors who see turnaround potential. The focus now is on whether growth and profitability can be sustained enough to drive shares toward their projected target.

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, and that also is a conservative number.

Read the complete narrative.

Want to know what drives this bullish outlook? The narrative leans on some unusually optimistic growth and profitability assumptions, along with faith in a management comeback. Discover which critical financial levers power this $100 price vision inside the full breakdown.

Result: Fair Value of $96.6 (UNDERVALUED)

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

However, persistent competition and any slowdown in consumer demand could challenge the optimistic recovery outlook that investors have pinned on NIKE’s turnaround.

Find out about the key risks to this NIKE narrative.

Another View: Market Ratios Tell a Different Story

While some see upside in NIKE’s turnaround narrative, looking at market comparisons gives pause. NIKE trades at a price-to-earnings ratio of 36.3x, which is not only higher than its US industry peers (21.1x) but also well above the estimated fair ratio of 27.4x. This points to a valuation risk that investors should weigh carefully. Could expectations already be baked into the price?

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

Build Your Own NIKE Narrative

If you want to dig into the numbers or put together your own take, it is quick and easy to 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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