NIKE designs, markets and distributes athletic footwear, apparel and equipment through the Nike, Jordan and Converse brands, supported by global athlete marketing, valuable intellectual property and a broad wholesale and owned-digital network.
NKE
· Consumer Cyclical · Apparel - Footwear & Accessories
· Market cap $52.95B
QuantHub Original Research · Updated 2026-09-17
·
Medium QualityMedium-tier business, attractive-tier valuation, with 9.9% upside to $39.33 fair value but an unresolved revenue and margin recovery.Fair Value
NKE is trading near fair value. No urgent action needed.
QuantHub Research: Investment Thesis
Maturing Phase
NIKE designs, markets and distributes athletic footwear, apparel and equipment through the Nike, Jordan and Converse brands, supported by global athlete marketing, valuable intellectual property and a broad wholesale and owned-digital network. Business quality is medium: its brand moat and 22.0% ROE remain meaningful, but the moat is narrowing amid intense competition, weak direct sales and uneven product demand. Revenue declined 1.1% year over year in the most recent quarter, while earnings growth of 406.6% in the most recent quarter was materially aided by a tariff-recovery benefit rather than reflecting clean underlying momentum. TTM gross, operating and net margins are 42.9%, 8.2% and 6.7%, respectively. At $35.78, NKE trades at 1.14x sales, 17.07x trailing earnings, 24.29x free cash flow and 12.01x EV/EBITDA, a cheap valuation regime relative to its five-year history, while the $39.33 fair-value estimate implies 9.9% upside. The valuation offers some turnaround optionality, but the modest upside and still-declining revenue base limit the risk-adjusted appeal.
NKE is cheap relative to its own five-year valuation history, reflected in 1.14x P/S, 17.07x trailing P/E, 24.29x P/FCF and 12.01x EV/EBITDA. The market is pricing a prolonged turnaround because revenue declined 1.1% year over year in the most recent quarter, NIKE Direct fell 7% in FY2026 Q4, Converse fell 32%, and management guided FY2027 Q1 revenue down low-to-mid single digits. The supplied analyst consensus is Hold with a $39.33 average target, broadly aligned with the $39.33 fair-value estimate and only 9.9% upside. Sentiment remains cautious following recent target cuts and ratings pressure, including Morgan Stanley's $31 Sell target, Citi's $39 Hold target, and Baird's $44 Neutral target. A cited market-data aggregation shows a higher $49.87 average target, but that figure conflicts with the supplied $39.33 consensus and should not be treated as the base valuation anchor. Trailing earnings also require caution because FY2026 Q4 EPS included a $0.52 tariff-recovery benefit.
12–18 Month Outlook
Over the next 18 months, NIKE is likely to be judged on whether a wholesale-led reset can offset ongoing weakness in Direct, Converse, Greater China and legacy footwear franchises. The near-term trajectory remains soft: revenue declined 1.1% year over year in the most recent quarter and management guided FY2027 Q1 revenue down low-to-mid single digits, with FY2027 Q2 expected to be sequentially weaker. Gross-margin improvement may emerge as management indicated, but investors should separate operational improvement from the unusually large FY2026 Q4 tariff-recovery benefit. If running innovation, wholesale restoration and World Cup-related demand creation improve sell-through, the shares could move toward the $39.33 fair-value estimate. If revenue remains negative and promotional or tariff costs persist, the current 9.9% fair-value upside provides limited protection.
Bull vs Bear
Bull Case
NIKE retains a global brand and distribution advantage, with FY2026 revenue of $46.4 billion, 56% of sales generated outside the United States and owned digital platforms operating in more than 40 countries.
Wholesale showed early stabilization in FY2026 Q4, rising 4% reported and 1% currency-neutral to $6.6 billion, which could support a broader channel recovery if retailer inventories normalize.
At $35.78, the $39.33 fair-value estimate implies 9.9% upside, while 1.14x sales and 12.01x EV/EBITDA price the shares in a cheap historical valuation regime.
Management expects gross-margin expansion to begin in FY2027 Q1, and its increased demand-creation spending around the World Cup could improve product visibility and consumer engagement.
NIKE's running-product momentum, athlete relationships and Nike and Jordan intellectual property provide a foundation for product-led recovery if the company restores full-price demand.
Bear Case
Revenue declined 1.1% year over year in the most recent quarter, and management guided FY2027 Q1 revenue down low-to-mid single digits, indicating that the top-line reset is not yet complete.
NIKE Direct revenue fell 7% reported in FY2026 Q4 and NIKE Brand Digital fell 12%, while Converse revenue fell 32%, exposing continued weakness in owned channels and secondary brands.
FY2026 Q4 gross margin of 49.2% included an approximately $986 million expected IEEPA-tariff recovery worth about 900 basis points, making reported profitability materially less representative of underlying operations.
Competition from adidas, HOKA, On, New Balance, ASICS, Puma, Anta and other brands is increasing promotional intensity and may prevent NIKE from rebuilding pricing power or market share.
Greater China revenue declined 13% currency-neutral in FY2026, Jordan revenue declined 5% currency-neutral, and NIKE Brand footwear declined 2% currency-neutral, demonstrating weakness in important franchises and regions.
Leadership & Competitive Position
Elliott Hill
Tenure1.9 yrs
Insider ownership15.6%
Capital allocationFair
Elliott Hill became President and CEO on October 14, 2024 after a long NIKE operating career. He is an internal returning executive rather than an external turnaround hire. Capital allocation has turned defensive: NIKE returned $2.5 billion in FY2026, primarily through $2.4 billion of dividends, while repurchases totaled only $123 million and were paused during FY2026 Q1. Swoosh, LLC and the Knight family retain substantial control through the dual-class structure.
Competitive Moat
narrowing
intangible assetsbrand
NIKE states that it remains the largest global seller of athletic footwear and apparel, but it does not disclose a quantified global market-share figure in the cited filings. Its scale remains substantial, with FY2026 revenue of $46.4 billion and 56% of sales generated outside the United States, but currency-neutral NIKE Brand revenue fell 1% in FY2026 and NIKE Direct fell 8%.
Competitors: adidas (ADS), Deckers Outdoor (DECK), On Holding (ONON), Puma (PUM), Lululemon Athletica (LULU), Under Armour (UAA)
Disruption: High because specialist running brands, established athletic competitors and emerging direct-to-consumer brands are fragmenting consumer demand and increasing promotional pressure in categories where NIKE has historically held strong brand influence.
QuantHub Research
Valuation
Multiple
Current
Median 3yr
Median 5yr
Min 5yr
Max 5yr
P/E
17.07x
25.28x
27.92x
21.87x
32.19x
P/S
1.14x
1.94x
2.81x
1.47x
4.02x
P/FCF
24.29x
27.53x
31.18x
21.8x
42.36x
P/S 1.14x vs 5yr range 1.47-4.02x (P25=1.47x, median=2.81x, P75=3.19x)
Price Outlook (5-Year)
Bear
$31
-2.5%/yr
Base
$39
1.9%/yr
fair value
Bull
$47
5.7%/yr
Bear/Base/Bull anchored to QuantHub fair value estimate. Base = headline fair value; Bear −20%; Bull +20%.
Results will test management's guidance for low-to-mid-single-digit revenue decline, slightly positive gross-margin performance and flat SG&A dollars despite high-single-digit demand-creation spending growth.
high
2026-09-21
S&P 100 deletion becomes effective
NKE is scheduled to be deleted from the S&P 100 before the market open, creating a potential index-flow and sentiment headwind but no direct operating change.
low
Risks
Revenue decline and channel weakness
high
Revenue declined 1.1% year over year in the most recent quarter, while FY2026 Q4 NIKE Direct revenue declined 7%, NIKE Brand Digital declined 12% and Converse declined 32%.
Margin pressure and tariff uncertainty
high
TTM operating margin is 8.2%, while FY2026 Q4 reported gross margin benefited from an approximately $986 million expected IEEPA-tariff recovery. Promotional activity, sourcing costs and uncertain tariff rates could constrain normalized profitability.
Competitive intensity
high
NIKE faces active competition from adidas, Anta, ASICS, HOKA, Li Ning, lululemon, New Balance, On, Puma and Under Armour, with discounting in legacy footwear creating pressure on pricing and market share.
China and franchise weakness
medium
Greater China revenue declined 13% currency-neutral in FY2026, Jordan revenue declined 5% currency-neutral and NIKE Brand footwear declined 2% currency-neutral, raising risk that key growth and brand engines recover slowly.
Retail partner demand risk
medium
Retailer caution and continued discounting in footwear can weaken wholesale replenishment and force higher promotions, even though NIKE wholesale grew 4% reported in FY2026 Q4.
Macroeconomic, foreign exchange and trade exposure
medium
With 56% of FY2026 revenue generated outside the United States, NIKE has meaningful foreign-exchange, consumer-demand, regulatory and trade-policy exposure that can affect reported revenue, margins and cash flow.
Governance concentration and legal scrutiny
medium
Swoosh, LLC held 78.8% of Class A shares and Class A holders elect eight of eleven directors under the current share mix, concentrating governance influence. The EEOC ended its subpoena-enforcement suit after NIKE provided information, but the underlying discrimination investigation was not described as resolved.
Growth Engines
Wholesale channel restorationscaling
Global athletic footwear and apparel wholesale remains a large addressable market. NIKE wholesale grew 4% reported and 1% currency-neutral in FY2026 Q4, but this remains an early recovery rather than evidence of broad market-share recapture.
Running product innovationearly
Running is a global athletic-footwear opportunity where NIKE has cited product momentum, but the company does not disclose a quantified running-category TAM in the cited research.
International brand expansionmature
NIKE operates in nearly all countries, with EMEA representing 28%, APLA 14% and Greater China 13% of FY2026 NIKE Brand revenue. International opportunity is large, but Greater China declined 13% currency-neutral in FY2026.
NIKE reported FY2026 Q4 results and issued FY2027 Q1 guidance
Quarterly revenue was $10.972 billion, down 1% reported, while reported gross margin of 49.2% and EPS of $0.72 benefited substantially from an expected IEEPA-tariff recovery. Management guided FY2027 Q1 revenue down low-to-mid single digits.
2026-08-17
David Denton became NIKE Executive Vice President and Chief Financial Officer
The CFO transition adds a new finance leader during a period of revenue contraction, channel repositioning and elevated tariff and margin uncertainty.
2026-08-13
EEOC dropped subpoena-enforcement lawsuit after NIKE provided responsive information
The enforcement suit ended, but the cited reporting did not state that the underlying discrimination investigation was resolved.
2026-09-04
S&P Dow Jones Indices announced NIKE's removal from the S&P 100
The deletion, effective before the September 21 market open, is primarily an index-flow and sentiment event rather than an operating development.
This is AI-powered fundamental analysis built from scratch — not aggregated analyst ratings. Get this research for your entire portfolio plus daily briefings, research signals, and options income.
QuantHub research is focused on quality businesses with durable competitive advantages — companies we'd want to own for 3–5 years or more. We are not short-term traders. Every analysis is built around a single question: is this a great business available at a reasonable price for a long-term investor?
We start where most analysts finish: the fundamentals. For every company, our AI ingests years of financial statements — revenue, margins, free cash flow, and how the business has been valued by the market across multiple cycles. But numbers alone don't tell you whether a business is worth owning.
The harder work is qualitative. We assess the competitive moat: is it widening or eroding? We read the leadership track record — how capital has been allocated, whether management has earned trust through consistent execution. We look at what the market is afraid of, and whether that fear is priced in fairly or irrationally.
Valuation is always relative. A stock is cheap or expensive compared to its own history. We build scenario matrices anchored to 5-year historical multiples, then ask: what has to go right for the upside case, and what's the floor if it doesn't?
Finally, we write an 18-month forward outlook — not a price target, but a mental model of where this business will be and what the narrative will look like. Every note is dated and versioned. When material facts change, we update the thesis.
Frequently Asked Questions
Is NKE undervalued?
NKE is currently fairly valued at $35.75 vs. our fair value estimate of $39.33 (+10% upside).
What is NKE's fair value?
QuantHub Research estimates NKE's fair value at $39.33 based on our proprietary valuation model incorporating historical P/S, P/E, and P/FCF multiples over a 5-year range.
What are the key risks for NKE?
Revenue decline and channel weakness: Revenue declined 1.1% year over year in the most recent quarter, while FY2026 Q4 NIKE Direct revenue declined 7%, NIKE Brand Digital declined 12% and Converse declined 32%. Margin pressure and tariff uncertainty: TTM operating margin is 8.2%, while FY2026 Q4 reported gross margin benefited from an approximately $986 million expected IEEPA-tariff recovery. Promotional activity, sourcing costs and uncertain tariff rates could constrain normalized profitability. Competitive intensity: NIKE faces active competition from adidas, Anta, ASICS, HOKA, Li Ning, lululemon, New Balance, On, Puma and Under Armour, with discounting in legacy footwear creating pressure on pricing and market share.
What is the bull case for NKE?
NIKE retains a global brand and distribution advantage, with FY2026 revenue of $46.4 billion, 56% of sales generated outside the United States and owned digital platforms operating in more than 40 countries. Wholesale showed early stabilization in FY2026 Q4, rising 4% reported and 1% currency-neutral to $6.6 billion, which could support a broader channel recovery if retailer inventories normalize. At $35.78, the $39.33 fair-value estimate implies 9.9% upside, while 1.14x sales and 12.01x EV/EBIT
How confident is QuantHub in NKE?
QuantHub has moderate conviction in NKE. Research last updated 2026-09-17.