Nike Inc
NYSE:NKE
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Intrinsic Value
The intrinsic value of one NKE stock under the Base Case scenario is 72.06 USD. Compared to the current market price of 82.15 USD, Nike Inc is Overvalued by 12%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Nike Inc
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Fundamental Analysis
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Nike Inc., founded in 1964, has risen to become a global leader in athletic footwear, apparel, and equipment. Known for its innovative products and iconic swoosh logo, Nike has cultivated a brand synonymous with performance and inspiration. The company’s extensive portfolio includes popular lines such as Air Max, Jordan, and Nike Free, appealing to a diverse range of consumers from professional athletes to everyday fitness enthusiasts. What sets Nike apart is its commitment to cutting-edge technology and sustainability, often investing in research to enhance athletic performance while also reducing environmental impact through initiatives like the Move to Zero campaign, which aims for a zero...
Nike Inc., founded in 1964, has risen to become a global leader in athletic footwear, apparel, and equipment. Known for its innovative products and iconic swoosh logo, Nike has cultivated a brand synonymous with performance and inspiration. The company’s extensive portfolio includes popular lines such as Air Max, Jordan, and Nike Free, appealing to a diverse range of consumers from professional athletes to everyday fitness enthusiasts. What sets Nike apart is its commitment to cutting-edge technology and sustainability, often investing in research to enhance athletic performance while also reducing environmental impact through initiatives like the Move to Zero campaign, which aims for a zero carbon and zero waste future.
For investors, Nike's impressive financial performance highlights its robust business model. The company has consistently delivered strong revenue growth, buoyed by a combination of direct-to-consumer sales, global market presence, and strategic partnerships with high-profile athletes and teams. Despite challenges such as supply chain disruptions and growing competition, Nike's resilience has proven its ability to adapt and thrive in a changing retail landscape. With a focus on digital transformation and e-commerce expansion, alongside a commitment to social responsibility, Nike not only strives for financial success but also seeks to inspire and uplift communities, making it an appealing investment for those looking to support a brand that aligns profitability with purpose.
Nike Inc. operates through several core business segments that contribute to its overall revenue and brand presence. The primary segments include:
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Footwear: This is the largest segment of Nike's business, encompassing a wide range of athletic shoes, casual footwear, and specialized performance shoes for various sports and activities. The footwear segment emphasizes innovation in design and technology, with popular lines like Air Max, Nike Free, and the Jordan Brand.
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Apparel: Nike offers a diverse range of athletic and lifestyle apparel, including tops, bottoms, and outerwear. This segment also focuses on performance-enhancing fabrics and technologies. The apparel line includes collections targeted at different sports, as well as casual and lifestyle clothing.
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Equipment: Although this segment is smaller compared to footwear and apparel, Nike produces athletic equipment, such as bags, socks, and various sports gear. This segment supports its footwear and apparel lines by providing additional product offerings for consumers.
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Direct-to-Consumer (DTC): In recent years, Nike has increasingly focused on its DTC approach, which includes both e-commerce and branded retail stores. This strategy allows Nike to connect directly with consumers, enhancing brand loyalty and improving profitability by reducing reliance on third-party retailers.
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International Markets: Nike operates in various international markets, significantly contributing to its revenue. The company's global presence allows it to tap into diverse consumer bases with tailored marketing strategies and product offerings.
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Digital Innovation: While not a separate segment, Nike has made substantial investments in digital platforms like the Nike app, Nike.com, and other digital services (e.g., Nike Training Club, Nike Run Club). This segment focuses on engaging consumers digitally and leveraging data analytics for personalized marketing.
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Sustainability Initiatives: Nike has been increasingly emphasizing sustainability in its business practices, which encompasses environmentally friendly products and ethical manufacturing processes. This segment aims to cater to the growing market demand for sustainable and ethical products.
These segments work cohesively to establish Nike's brand positioning as a leader in the athletic and lifestyle sectors, driven by innovation, consumer engagement, and global outreach.
Nike Inc. has several unique competitive advantages that set it apart from its rivals in the athletic footwear and apparel industry:
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Strong Brand Equity: Nike is one of the most recognized brands globally, synonymous with quality and innovation. This powerful brand recognition fosters consumer loyalty and allows Nike to command a premium price for its products.
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Innovative Product Development: Nike invests heavily in research and development, leading to continuous innovation in product design and technology. Innovations such as Nike Air cushioning, Flyknit technology, and Dri-FIT fabric set Nike products apart from competitors.
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Endorsements and Sponsorships: Nike has longstanding partnerships with world-class athletes and teams, enhancing its visibility and image. Endorsements by top athletes like LeBron James, Serena Williams, and Cristiano Ronaldo contribute to consumer trust and aspirational appeal.
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Robust Marketing Strategy: Nike employs sophisticated and targeted marketing campaigns that resonate with various consumer segments. Their "Just Do It" slogan and emotional storytelling in advertising create a deep connection with customers.
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Global Distribution Network: Nike has a well-established and efficient supply chain and distribution network, allowing it to reach markets worldwide effectively. Its ability to scale operations and optimize logistics is a significant advantage.
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Diverse Product Lines: Nike offers a wide array of products across various sports and fitness categories, which allows it to appeal to a broader audience and mitigate risks associated with fluctuations in consumer preferences.
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Strong Financial Position: Nike's solid financial health enables it to invest in marketing, R&D, and acquisitions, maintaining its competitive edge. This financial strength can also help Nike weather economic downturns better than less robust rivals.
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Sustainable Practices: Nike is increasingly focused on sustainability and corporate responsibility, which resonates with environmentally conscious consumers. Initiatives like the "Move to Zero" program aim to reduce carbon emissions and waste.
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Digital Transformation: Nike has embraced e-commerce and digital marketing, leveraging advanced technology to enhance customer experience. Its direct-to-consumer (DTC) sales strategy through apps and online platforms has grown significantly, allowing for better customer engagement and margins.
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Customer Loyalty Programs: Nike has developed strong loyalty programs, such as the Nike Membership program, which encourages repeat purchases and fosters community among users through exclusive offers and events.
These competitive advantages help Nike maintain its leading position in the market and contribute to sustained profitability and growth.
Nike Inc. faces several risks and challenges in the near future, which can impact its performance and market presence:
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Supply Chain Disruptions: Ongoing global supply chain issues, exacerbated by the COVID-19 pandemic, geopolitical tensions, and natural disasters, can impact production and distribution. Delays in sourcing materials or manufacturing could lead to inventory shortages and affect sales.
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Competition: The athletic apparel and footwear market is highly competitive. Nike faces challenges from both established brands like Adidas and Under Armour and emerging DTC (direct-to-consumer) brands that leverage e-commerce and innovative marketing strategies.
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Changing Consumer Preferences: As consumer interests shift towards sustainability and social responsibility, Nike must continually adapt its products and business practices. Failure to meet these expectations could lead to reputational damage and lost sales.
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Economic Uncertainty: Economic factors such as inflation, recession fears, and fluctuating disposable incomes can affect consumer spending on discretionary items like athletic wear. A downturn could reduce sales and profitability.
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Regulatory Compliance: Nike operates in numerous countries, which subjects it to a variety of regulations regarding labor practices, environmental standards, and trade policies. Changes in regulations or failure to comply could pose legal risks and impact operations.
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Counterfeit Products: The prevalence of counterfeit products can undermine brand integrity and hurt sales. Nike must continually invest in anti-counterfeiting measures and brand protection strategies.
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E-commerce Competition: While Nike has made significant investments in its e-commerce platform, it must compete with established online retailers and marketplaces that may offer similar products at lower prices, impacting Nike’s market share and margins.
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Technology and Innovation: Rapid changes in technology mean that Nike must continually innovate its products and marketing strategies. Failing to keep up with trends such as digital integration in retail or advancements in performance wear could hinder growth.
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Sustainability Initiatives: As sustainability becomes increasingly important to consumers, Nike will need to invest in environmentally friendly practices, which can increase costs. Balancing profitability with sustainability is a strategic challenge.
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Market Sentiment and Brand Loyalty: Changes in public sentiment regarding brand practices or social issues can influence brand loyalty. Nike needs to maintain a strong connection with its brand values and ensure alignment with consumer expectations.
Navigating these risks will require strategic foresight and agility from Nike's management team.
Revenue & Expenses Breakdown
Nike Inc
Balance Sheet Decomposition
Nike Inc
Current Assets | 25B |
Cash & Short-Term Investments | 10.3B |
Receivables | 4.8B |
Other Current Assets | 10B |
Non-Current Assets | 12.8B |
PP&E | 7.7B |
Intangibles | 499m |
Other Non-Current Assets | 4.6B |
Current Liabilities | 10.6B |
Accounts Payable | 3.4B |
Accrued Liabilities | 5.6B |
Short-Term Debt | 12m |
Other Current Liabilities | 1.7B |
Non-Current Liabilities | 13.3B |
Long-Term Debt | 8B |
Other Non-Current Liabilities | 5.3B |
Earnings Waterfall
Nike Inc
Revenue
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50B
USD
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Cost of Revenue
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-27.6B
USD
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Gross Profit
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22.4B
USD
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Operating Expenses
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-16.5B
USD
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Operating Income
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5.9B
USD
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Other Expenses
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-615m
USD
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Net Income
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5.3B
USD
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Free Cash Flow Analysis
Nike Inc
USD | |
Free Cash Flow | USD |
In Q1, NIKE's revenue declined by 10%, driven by notable drops across digital and wholesale channels. The gross margin improved to 45.4%, but EBIT also fell 15%. Guidance for Q2 projects further revenue declines of 8% to 10% and a gross margin decrease of approximately 150 basis points due to increased promotions. While challenges persist, particularly with classic franchises, optimism for the running segment persists with double-digit growth anticipated. Overall, NIKE emphasized strategic shifts in product portfolio to enhance brand momentum despite adversity and aims for gradual recovery as new innovations hit the market.
What is Earnings Call?
NKE Profitability Score
Profitability Due Diligence
Nike Inc's profitability score is 63/100. The higher the profitability score, the more profitable the company is.
Score
Nike Inc's profitability score is 63/100. The higher the profitability score, the more profitable the company is.
NKE Solvency Score
Solvency Due Diligence
Nike Inc's solvency score is 75/100. The higher the solvency score, the more solvent the company is.
Score
Nike Inc's solvency score is 75/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
NKE Price Targets Summary
Nike Inc
According to Wall Street analysts, the average 1-year price target for NKE is 94.09 USD with a low forecast of 57.57 USD and a high forecast of 126 USD.
Dividends
Current shareholder yield for NKE is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
NKE Insider Trading
Buy and sell transactions by insiders
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Profile
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Dividend Yield
Description
NIKE, Inc. engages in the design, development, marketing, and sale of athletic footwear, apparel, accessories, equipment, and services. The company is headquartered in Beaverton, Oregon and currently employs 73,300 full-time employees. The firm's operating segments include North America, Europe, Middle East & Africa (EMEA), Greater China, and Asia Pacific & Latin America (APLA). The company focuses its NIKE Brand product offerings in categories such as Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training and Sportswear. The company also markets products designed for kids, as well as for other athletic and recreational uses such as American football, baseball, cricket, golf, lacrosse, skateboarding, tennis, volleyball, walking, wrestling and other outdoor activities. The company sells a line of performance equipment and accessories under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment and other equipment designed for sports activities.
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IPO
Employees
Officers
The intrinsic value of one NKE stock under the Base Case scenario is 72.06 USD.
Compared to the current market price of 82.15 USD, Nike Inc is Overvalued by 12%.