Nike Stock Trades at a Once-in-a-Decade Valuation. Is It a Buy?

Core Viewpoint - Nike is experiencing a decline in revenue and profits, leading to a significant drop in stock valuation, which is now at a historically low level, but the brand's strength and new leadership may provide a path for recovery [1][2][3][4]. Financial Performance - Revenue for Nike is down 9% year-over-year through the fiscal third quarter of 2025, while demand creation expenses have increased by 8% [1] - Net income has fallen by 28% to $3 billion in fiscal 2025 compared to the same period in fiscal 2024 [2] - Nike's stock is currently valued at just below 2 times sales, the lowest since 2013 [2] Brand Strength - Nike boasts nearly$50 billion in annual revenue and operates in almost 200 countries with over 40,000 distribution points, indicating strong brand recognition [5] - The brand's competitive advantage is significant, suggesting that if Nike can leverage this, it may rebound from its current challenges [6] Leadership Changes - New CEO Elliott Hill, who has extensive experience with Nike, is expected to bring renewed energy and focus to the company [7] - Hill's previous work on marketing the Jordan brand may enhance Nike's product pipeline and partnerships [8] Profit Margin and Growth Potential - Current operating margin is around 10%, below the historical average of 12%, indicating potential for improvement [10] - A recovery in profit margins could lead to favorable stock performance, but sustainable top-line growth is necessary for long-term success [11][12] Market Position and Challenges - Nike remains the market-share leader in athletic apparel, but the market is mature with limited growth potential [13] - Less than half of Nike's revenue comes from North America, complicating projections for international growth amid rising global trade complexities [14]