Nike Stock Is Down 62%. Is It a Buy?

Core Insights - Nike's stock has dropped 62% from its peak due to declining sales, reaching new lows after the latest earnings update [1] - Analysts predict a 10% decline in sales for the fiscal year ending in May, indicating continued softness in demand [2] - Despite recent sales challenges, Nike's brand power remains strong, with trailing-12-month revenue of $47 billion [4] Recent Sales Trends - Last quarter, Nike's revenue fell 7% year over year on a constant-currency basis, with declines in both wholesale and Nike Direct revenues [3] - Competitors like Lululemon Athletica and On Holding continue to grow, highlighting Nike's current struggles [3] Strategic Initiatives - New CEO Elliott Hill is focusing on core products and streetwear, with running shoes showing a sales increase, indicating a positive trend [5] - The launch of the new 24.7 collection has exceeded expectations, and Nike is investing to expand capacity to meet demand [6] Valuation and Earnings Potential - Nike's current share price of $65 is the lowest in over five years, with a forward P/E ratio of 31, higher than its 20-year average of 29 [7] - If Nike returns to a profit margin of around 12%, earnings per share could reach approximately $3.80, reducing the P/E to 17 [8] - Analysts forecast earnings of $3.67 by fiscal 2027, with a forward dividend yield of 2.46%, suggesting potential attractive returns [9]