Footwear & Accessories
Updated on July 16, 2024, by Mark Pukhov
Nike, Inc. operates in the "Footwear & Accessories" industry, designing, developing, and marketing athletic footwear, apparel, equipment, accessories, and services worldwide.
Incorporated in 1967, it is now the largest seller of athletic footwear and apparel in the world. Despite its long financial history, we'll focus today only on its current KPIs.
1. Trailing PE
2. Trailing EPS and EPS next year
3. Trailing ROE and ROA
4. mrq PB ratio
5. mrq DE ratio
6. Intrinsic value
Nike's PE ratio (ttm) is currently slightly lower than the footwear and accessories industry's average of 21.90.
NIKE, inc.
19.53
Nike's Q4 report, which also contained the results for the full year, caused its stock price to drop not long ago, on June 28, because the company performed worse than expected.
Ideally, we should analyze Nike's entire EPS history, but for now, we can only compare it with next year's expected EPS.
NIKE, inc.
$3.73
As you can see, experts expect EPS to drop by 4.56% in the upcoming year, making it even lower than it is now.
NIKE, inc.
$3.56
Given that investors consider 5% to be good and 20% to be excellent, Nike's ROA is quite high.
NIKE, inc.
15.07%
But compared to Deckers Brands' ROA of 26.43% (the second-largest company by market cap in the footwear and accessories industry), it doesn't look that impressive.
Nike's ROE, on the other hand, is also quite high, twice as big as what investors generally look for: 15-20%
NIKE, inc.
40.09%
Unfortunately, the company's PB ratio is high too, exceeding both the typical value investor's threshold of 3.0 and the industry average of 6.33.
NIKE, inc.
7.73
The DE ratio looks very good, slightly exceeding the threshold of 0.80 that Warren Buffett suggests setting when looking for investments.
NIKE, inc.
0.83
The last KPI that we'll take a look at is Nike's intrinsic value. The most important thing is that the market price should be lower than the company's intrinsic value.
Surprisingly, Nike's intrinsic value under the base case scenario almost matches the market value of the stock as of July 16: 72.81 USD.
NIKE, inc.
$73.17
As you can see, the company's 21% stock price drop in June 2024 was just a market correction, and in my opinion, this didn't result in Nike stock becoming a good purchase.
But that doesn't mean the company itself is bad and performs very poorly; it's just that the purchase of Nike stock doesn't look like a real bargain now.
Sure, if you know the company has a competitive advantage over its peers and has performed remarkably in the past, then it's a must-buy at a fair price, even without a discount.