Should Investors Buy Nike Stock as its Q3 Earnings Approach?

Core Insights - Nike is set to release its fiscal third quarter results on March 20, which will provide insights into the consumer discretionary sector [1] - The stock is currently 7% above its 52-week low of $68 and significantly below its one-year high of $101, indicating ongoing market challenges [2] - Nike faces increased competition from brands like Adidas, Under Armour, and Lululemon, necessitating innovation in its product line [3] Financial Performance Expectations - Nike's Q3 sales are expected to decline by 10% to $11.12 billion compared to $12.43 billion in the same quarter last year, with Greater China sales projected to drop 13% to $1.81 billion [5] - The company's Q3 EPS is anticipated to fall to $0.28 from $0.98 a year ago, although it has exceeded EPS consensus estimates for six consecutive quarters with an average surprise of 29.82% [6][7] Market Position and Stock Performance - Nike's stock has decreased by 3% in 2025, underperforming the S&P 500's decline of 5%, and has plummeted 27% over the past year compared to the broader market's increase of 7% [9] - Over the last decade, Nike has gained 43%, outperforming Under Armour but trailing behind the benchmark, Adidas, and Lululemon [10] Valuation Metrics - Currently, Nike trades at a forward earnings multiple of 35.6X, which is a premium compared to the benchmark's 21.1X and the industry average of 11X, yet below its decade-high of 51.1X [11] Future Outlook - Nike's total sales are expected to decline by 10% this year but are projected to stabilize and rise by 1% in fiscal 2026 to $46.59 billion, with EPS expected to rebound to $2.25 in FY26 [6][8] - The stock currently holds a Zacks Rank 3 (Hold), with future performance dependent on meeting or exceeding Q3 expectations and providing guidance that indicates a return to growth [13][16]