Nike Vs Adidas Stock: Which is the Better Investment for 2025?

Core Viewpoint - As of early 2025, Nike shares are near 52-week lows while Adidas stock is close to its highs, prompting a comparison of investment potential between the two companies [1] Group 1: Company Performance - Nike is facing challenges due to a need to revamp its product line and increased competition from brands like Under Armour and New Balance, leading to slower sales growth and inventory issues [3] - Adidas has capitalized on Nike's downturn by expanding its product offerings, resulting in improved financial metrics and positive market sentiment [4] Group 2: Financial Outlook - Nike's total sales are projected to decline by 10% in fiscal 2025 to $46.34 billion, down from$51.36 billion in the previous year, with a slight recovery expected in fiscal 2026 [5] - Nike's annual earnings are expected to drop 47% to $2.10 per share in fiscal 2025, compared to$3.95 in 2024, although a rebound to $2.36 is projected for fiscal 2026 [6] - Adidas is expected to see a 6$27.3 billion, and annual earnings forecasted to rise to $2.15 per share from a loss of -$0.36 in FY23 [8] Group 3: Valuation Metrics - Nike is trading at $71 per share with a forward earnings multiple of 34.3X, while Adidas is priced at$125 with a multiple of 30.9X, both above the S&P 500 average of 22.1X [9] - In terms of price to sales, Adidas is more attractive at under 2X, while Nike stands at 2.3X [10] Group 4: Dividend Comparison - Nike offers a 2.22% annual dividend yield, significantly higher than Adidas's 0.19% and the industry average of 1.92% [12] Group 5: Investment Sentiment - Adidas currently holds a Zacks Rank 3 (Hold), while Nike is rated Zacks Rank 5 (Strong Sell), indicating a more favorable outlook for Adidas despite Nike's appeal to income investors [14]