# Nike (NKE) — InvestMoat Analysis _Last analyzed: May 2026_ _Asset class: equity · Canonical page: https://investmoat.com/stocks/nke_ ## Scores | Dimension | Score (0–100) | | --- | --- | | Moat durability | 57 | | Growth trajectory | 45 | | Valuation | 82 | | **Composite** | **59** | | **Recommendation** | **Avoid** | Scores are computed deterministically from this asset’s data by the InvestMoat formula (see https://investmoat.com/llms.txt for methodology). Scores are not directly comparable across asset classes. ## Key stats - **Ticker:** NKE - **Market Cap:** ~$62B ## Moat Iconic global athletic brand with the deepest sports marketing footprint in apparel/footwear — durable but currently weakened by execution missteps; turnaround under CEO Elliott Hill is the thesis. ### The Iconic Brand Moat Nike's moat is **brand + sports marketing scale + product innovation cadence** — temporarily weakened but structurally intact: - **Brand and Athlete Marketing Footprint:** Nike's athlete and team contracts (NBA, NFL collegiate, EPL/UEFA, Olympics) are unmatched in scale globally. The marketing flywheel — visibility on the world's biggest sporting moments — compounds product launches and pricing power. Lululemon, Adidas, On, and Hoka have brand strength in subsets; only Nike spans every major sport globally. - **Wholesale + DTC Channel Mix Rebuild:** The 2020-23 DTC over-pivot weakened wholesale relationships; Hill's strategy under-way reverses the missteps and rebuilds partnerships with Foot Locker, Dick's, JD Sports. The rebuild is multi-quarter but addresses the primary execution wound. Successful rebuild restores the brand's traffic flywheel. - **Product Innovation Cadence:** Nike's R&D and product development pipeline (Pegasus, Vomero, Alphafly, Air Max) remains the deepest in sport footwear. The 2024-25 lineage gap created an opening for Hoka, On, and New Balance — but the 2026 product cycle is reportedly the deepest in 5 years. Innovation cadence is the biggest swing factor. **Moat verdict:** Nike's moat is brand + scale + product cadence — AI is largely neutral (improves marketing efficiency, accelerates design but does not threaten the brand). The thesis question is execution-and-China, not technological obsolescence; with stock at $42 (52-week low) and FY27 EPS recovery still intact, the risk/reward has improved despite worsening China — turnaround thesis is now priced as failed. ## Growth FY26 Q4 revenue guided -2% to -4% (vs +1.9% consensus); Greater China expected to fall ~20% this quarter on Anta/local-brand share gains. Q3 FY26 was a slight beat ($11.28B rev, EPS $0.35) but NIKE Direct -4% and digital -12%. FY27 inflection still the thesis (mid-single-digit growth, GM recovery to 44%) but the bar has lowered and tariff drag is now material. - **Revenue CAGR estimate:** 2-5% - **Primary type:** market share - **Margin trend:** compressing - **Key risk (high):** If China continues declining 15%+ into FY27 and tariff pass-through fails (class-action over tariff pricing already filed), gross margin recovery stalls below 43% and FY27 EPS comes in below $4, pushing the bear case to <$35. - **Drivers:** - North America — Strong summer order book; mgmt sees positive sell-through despite Mideast disruption (stable) - Greater China — Q4 FY26 guided ~-20%; Anta capturing basketball/lifestyle share (decelerating) - Innovation Cadence — 2026 product cycle reportedly deepest in 5 years; key swing factor (accelerating) - **Score derivation:** Base 60 (4-8% CAGR low band) + 3 turnaround optionality (Hill leadership, NA order book) - 7 China deterioration (20% Q4 decline guided) - 3 competition (Hoka/On + Anta share gain) = 53 ## Valuation At ~$42 NKE trades at ~13× depressed FY26 EPS — a deep discount to its 5-year median (~28×) and the cheapest the brand has been in over a decade. Through-cycle FY27 EPS recovery to $4+ implies just ~10× on the next-year number, with a 3% dividend yield as carry. Valuation now prices in a failed turnaround. | Multiple | Value | Note | | --- | --- | --- | | Forward P/E (FY26) | ~13× | EPS ~$3.30; trough cycle | | Forward P/E (FY27) | ~10× | Assumes EPS recovery to $4.30+ | | Price / Sales (FY26) | ~1.3× | Deepest discount to historical median in 10+ years | | Dividend Yield | ~3.8% | Sustained through trough cycle | | FCF Yield | ~7% | FCF compressed; recovers with margin | Valuation prices in a failed turnaround; any FY27 inflection or China stabilisation drives material upside. _(as of May 2026)_ ## Price scenarios ### Bear — $32 Turnaround stalls, China continues -15% into FY27, tariffs persist, FY27 EPS comes in below $3.50, multiple compresses to ~9× as the market reprices the brand toward Adidas-style structural decline. - FY27 fails to inflect; revenue still flat-to-down - Greater China revenue continues declining 15%+ on Anta/local share gains - Tariff class-action and gross margin compression below 41% ### Base — $65 FY27 inflects to low-to-mid-single-digit growth, gross margin stabilises around 43-44%, EPS rebuilds to $4.20, multiple expands modestly to ~15×. - FY27 revenue grows low-single-digits as NA order book + product cycle land - Greater China stabilises after Q4 FY26 reset - Tariff pass-through partially offsets margin drag ### Bull — $95 Hill turnaround executes, 2026 product cycle resonates, FY28 EPS recovers to $5+, multiple rerates to 19× on brand reassessment and China stabilisation. - FY28 revenue grows 6-8% on innovation cadence + Greater China recovery - Gross margin recovers to 45%+ on lower discount and direct mix - Athletic apparel category leadership reasserted; multiple rerates --- InvestMoat is an open-source research and education framework. Nothing here is financial advice. Past performance does not guarantee future results.