NKE

Executive Summary

Twelve-Year Low, 4.6% Yield, and a Turnaround Still Waiting for Revenue

Nike (NKE) closed at $35.75, down 53.6% from its 52-week high and sitting just 1.5% above its low, after exiting the S&P 100 on Sep 21 and taking a Bank of America downgrade to Underperform ($30 PT). The pieces of Elliott Hill's reset are real: Running has posted five straight double-digit quarters, wholesale grew 4% in Q4, and World Cup kit sales ran 2.5× 2022. But FY26 revenue was flat at $46.4B, Greater China fell 17% currency-neutral in Q4, Converse dropped 32%, and Q4's $0.72 GAAP EPS includes a $0.52 one-time IEEPA tariff recovery (underlying $0.20). At ~1.1× sales the stock is the cheapest it has been since 2009, but trailing free cash flow of $2.18B no longer covers the $2.4B dividend. HOLD with a $39 target: the Oct 1 print has to show revenue bottoming before this becomes a value buy rather than a value trap.

Fundamentals

FY26 Snapshot (year ended May 31, 2026) — Flat revenue, a gross margin flattered by a one-time tariff refund, and a dividend now running ahead of free cash flow.

FY26 Revenue

$46.4B

Flat reported · −2% currency-neutral (SEC EDGAR)

Q4 FY26 Revenue

$10.97B

−1% YoY · 4th sequential decline from Q2's $12.43B

FY26 Gross Margin

42.9%

Q4 49.2% includes ~900 bps IEEPA recovery

FY26 Diluted EPS

$2.10

−3% YoY · Q4 $0.72 incl. $0.52 one-time benefit

Forward P/E

≈21×

On FY27 consensus ~$1.70–1.84; BofA at $1.43

EV / Sales

1.19×

P/S ~1.1×, lowest since 2008–09

Dividend Yield

4.59%

$1.64/yr · 24 straight years of increases

FCF (TTM)

$2.18B

vs $2.4B dividends paid in FY26 · ~0.9× coverage

Quarterly Revenue Trend (SEC EDGAR)

$11.7B

Q1 FY26

$12.4B

Q2 FY26

$11.3B

Q3 FY26

$11.0B

Q4 FY26

Turnaround Scorecard

Sport Offense Is Working in Running; the Rest of the Portfolio Is Not Yet

5 qtrs

Double-Digit Running Growth

~$1B added over five quarters (Q4 FY26 call)

−17%

Greater China, Q4 (c-n)

Management calls it a multi-quarter reset

2.5×

World Cup Kit Sales vs 2022

Mercurial: fastest 24-hr cleat launch on Nike Direct

Jun 30, 2026

Q4 FY26: beat on a tariff refund

Revenue $10.97B (−1%); EPS $0.72 incl. $0.52 IEEPA recovery; Q1 FY27 guided down low-to-mid single digits, H1 earnings 'flattish'.

Sep 21, 2026

Removed from the S&P 100

Ends an 18-year run; forced index selling into a twelve-year low.

Sep 25–26, 2026

BofA to Underperform ($30); Goldman to $38

FY27 EPS cut to $1.43 at BofA on wholesale, China and lifestyle weakness.

Oct 1, 2026

Q1 FY27 earnings

Street ~$0.44 EPS / ~$11.35B revenue (−3%); options imply ~8% move. Q2 guide and wholesale order book are the swing factors.

Q2 FY27 (Nov 2026)

Promised gross-margin inflection

Management expects margin expansion to start in Q2 and four quarters of sequential improvement.

Earnings & Signals

Forward Estimates, Surprises & Insider Activity

Forward Earnings Estimates

FY+1 EPS Consensus~$1.72–1.84 (FY27e consensus; JPM $1.55, BofA $1.43)

FY+2 EPS Consensus~$2.20 (FY28e, ESTIMATE from +29% consensus growth; BofA $1.87)

PEG Ratio1.8–2.4

Forward P/E≈21×

EPS Revisions (90d)↑0 ↓4 (Down — JPM (Aug), BofA and Goldman (Sep) all cut; revenue revisions have not stabilized)

Guidance AccuracyBeat EPS all four FY26 quarters, but the stock fell on forward guidance after Q3 (−8% after hours)

Earnings Surprise Track Record

Q1 FY26 Est: $0.27 Act: $0.49 +81%

Q2 FY26 Est: $0.38 Act: $0.53 +39%

Q3 FY26 Est: $0.28 Act: $0.35 +25%

Q4 FY26 Est: $0.13 Act: $0.20 (ex-IEEPA) +54%

Beat Rate4/4 — against a bar that kept being lowered

Insider Activity (90 Days)

Net Buying/Selling~$0.6M net selling (14,974 shares)

Sell/Buy RatioSells only, no open-market buys

Mildly negative: small, routine-sized sales, but no insider buying despite a twelve-year low

CFO Matthew Friend sold 2,463 sh at ~$41.60 (Aug 5); COO Venkatesh Alagirisamy sold 3,671 sh at ~$37.59 (Sep 9).

Peer Comparison

Relative Valuation vs. Competitors

Company	P/E (fwd)	EV/Rev	Rev Growth	Gross Margin
Nike	21.1×	1.19×	flat (FY26)	42.9% (FY26)
adidas	14.0×	1.16×	+7.9% (3y fcst)	51.6%
Deckers	10.3×	1.73×	+7.4% (3y fcst)	57.8%
On Holding	16.3×	2.30×	+18.2% (3y fcst)	64.8%
lululemon	12.2×	1.08×	−1.4% (3y fcst)	54.9%

Nike is the most expensive name in the set on forward earnings (≈21× vs 10–16× for peers) while having the lowest gross margin and no growth. The EV/sales discount is real, but on earnings the stock is not yet cheap: it only is if margins recover toward the low-teens operating margin management is targeting.

Valuation

Price Targets & Scenarios

Scenario	Price Target	Assumptions	Probability
Bull Case	$53	Q1 shows revenue troughing; North America wholesale holds; China declines narrow by H2; gross margin inflects in Q2 as promised. FY28 EPS ~$2.40 × 22× as the market pays up for recovery. Dividend safe.	20%
Base Case	$40	Revenue flat to slightly down through FY27, Running offsets lifestyle and Converse declines, margins recover slowly. FY28 EPS ~$2.00 × 20×. Dividend held flat, not raised meaningfully.	50%
Bear Case	$27	Q1/Q2 guide cut again; China and lifestyle keep falling; tariffs and promotions cap margins. FY28 EPS ~$1.60 (BofA-like) × 17×; dividend frozen or cut, which breaks the income holder base.	30%

Probability-Weighted Target: $39 (≈+9% vs $35.75, plus a 4.6% yield)

$39

Weighted

Bull $5320%

Base $4050%

Bear $2730%

Analyst Consensus

Bank of America

$30

Downgrade to Underperform (Sep 25, 2026), from $47

Goldman Sachs

$38

Neutral, PT cut from $42 (Sep 26, 2026)

Barclays

$48

Overweight, PT cut from $52

Bernstein

$68

Outperform, PT cut from $72 (Jul 29, 2026)

10 Buy · 21 Hold · 7 Sell — Hold consensus across 38 analysts (1 Strong Buy, 9 Buy, 21 Hold, 7 Sell) per MarketBeat. Average target ~$47.80 is stale relative to the late-September cuts to $30–$38.

Technical

Key Levels & Options Intelligence

S/RSupport & Resistance

52-Week High

$76.97

200-Day MA

$49.49

50-Day MA

$39.68

Current Price

$35.75

52-Week Low

$35.22

BofA Bear Target

$30.00

OptOptions & Sentiment

RSI (14): 35 — near oversold
Put/Call (OI): 0.77
Put/Call (5-day volume): ~0.70
Implied earnings move: ±8.3% (TipRanks)
Short interest: 75.6M sh · 6.4% of float
Days to cover: 2.8
Trend: Below 50- and 200-DMA; 50 < 200

Conviction Analysis

Systematic Conviction Score: 51/100 (Medium)

Analyst Alignment

30%

FCF Visibility

25%

Catalyst Clarity

20%

Valuation Safety

15%

Mgmt Quality

10%

Weighted 0.30/0.25/0.20/0.15/0.10 gives 51 (Medium). A dated catalyst (Oct 1) and a sales multiple at 2009 levels are offset by one-way estimate cuts, a Hold/Sell-heavy Street, and FCF that does not cover the dividend. Management's sport-offense reset is showing up in Running but not yet in the total top line.

Risk & Ownership

Risk Assessment & Insider Signals

OOwnership & Insider Signals

Knight family control via Class A shares: 281.4M Class A shares (FY26 10-K cover) elect three-quarters of the board; stockanalysis puts insider ownership at ~20%. Takeover or activist pressure is effectively off the table.
Institutions ~64–66%: MarketBeat 64.3%, stockanalysis 66.1%; heavy passive ownership means index changes (S&P 100 exit) move the stock.
Income holders are a new marginal buyer: At a 4.6% yield with 24 straight years of increases, NKE is screening into dividend funds, which makes the dividend decision more consequential for the share price.
Buyback has effectively stopped: Only $123M repurchased in FY26 (1.8M shares) against an $18B authorization; capital return is almost entirely dividends.
Short interest moderate at 6.4%: 75.6M shares short, 2.8 days to cover: enough for a squeeze on a good print, not enough to be a thesis on its own.

Risk Heatmap

Quantified Risk Assessment

Severity Risk Factor Prob. PT Impact

High Dividend coverage breaks

FY26 dividends ($2.4B) exceeded TTM free cash flow ($2.18B) and GAAP payout is ~78%; on BofA's $1.43 FY27 EPS the $1.64 dividend is not covered by earnings. A freeze or cut would push out income holders who now anchor the stock.

30% -20%

High Greater China keeps resetting

China fell 17% currency-neutral in Q4 after a guided ~20% drop; management calls it multi-quarter. Local brands (Anta, Li-Ning) and premium competitors have taken share.

50% -10%

Medium Wholesale order book softens

Q4 wholesale +4% was the bright spot, but analysts flagged North America wholesale order-book reductions and BofA cites weak wholesale momentum.

40% -8%

Medium Share loss to On, Hoka, adidas

Nike ceded shelf space during its DTC push; adidas is flat over the year while Nike fell ~43%. Winning it back needs sustained innovation.

45% -8%

Medium Tariffs and promotions cap margin recovery

The $986M IEEPA refund is non-recurring; other tariffs remain 'a dynamic cost headwind' and a promotional retail environment limits pricing.

35% -7%

Low Converse keeps shrinking

Converse revenue fell 31% in FY26 to $1.2B. Small in the total, but it is a drag on growth and brand-portfolio credibility.

60% -3%

Recommendation

Summary

Rating

HOLD

Conviction

Medium

Price Target

$39

Timeframe

12–18 mo

Upside

+9%

Position Size

1.5%–2.5%

Entry Strategy

Tranche 1 — 30%

$34–36, after Oct 1

Start only after the print, and only if the Q2 guide does not cut again and management reaffirms the dividend. The implied move is ±8%; don't pay for it.

Tranche 2 — 35%

~$31

Add near BofA's $30 bear target, where the yield would exceed 5% and the stock prices in a no-growth outcome.

Tranche 3 — 35%

Above $40

Add on confirmation: a close above the 50-DMA plus evidence of China stabilizing or wholesale holding into Q2.

1-Year Price & Key Levels