Is Nike Inc (NKE) A “Good” Investment For The Next 5 Years?

Nike Inc is an American multinational corporation that designs and markets footwear, apparel, equipment, accessories and services. The company offers a wide range of products around the world under its namesake Nike brand.

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Introduction

Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. Nike is the world’s largest supplier of athletic shoes and apparel[4] and a major manufacturer of sports equipment with revenue in excess of US$37.4 billion in its fiscal year 2012 (ending May 31, 2012). As of 2020, it employed 76,700 people worldwide.

Nike, Inc. History

Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is one of the world’s largest suppliers of athletic shoes and apparel and a major manufacturer of sports equipment.

Nike was founded in 1962 as Blue Ribbon Sports by Bill Bowerman and Phil Knight, and officially became Nike, Inc. in 1978. The company takes its name from Nike (the Greek goddess of victory). Nike markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Air Force 1, LeBron James signature shoes among others.

The company is a major sponsor of sports teams and events around the world; it also has a highly recognizable ‘swoosh’ logo. In 2014, Nike sold US$30.6 billion worth of merchandise. The company employs more than 44,000 people worldwide as of 2016.

Balance Sheet Analysis

Nike Inc (NKE) is a publicly traded company with a market capitalization of over $100 billion. Nike’s balance sheet is in good shape, with over $4 billion in cash and no long-term debt. Nike also has a strong brand and is one of the most recognizable names in the world.

In terms of profitability, Nike has been doing well in recent years. Nike’s net income has grown at an annual rate of 9% over the past five years. return on equity (ROE) has been consistently above 20%.

Looking forward, analysts expect Nike’s earnings to grow at an annual rate of about 10%. Given Nike’s strong balance sheet and profitable track record, I believe Nike is a good investment for the next few years.

Income Statement Analysis

Looking at Nike’s income statement, we can see that their revenue has been growing steadily over the past few years. In 2018, their revenue was $36.4 billion, and in 2019 it increased to $39.2 billion. This shows that Nike is performing well and is growing as a company.

Operating expenses have also been increasing, but at a slower rate than revenue. This means that Nike is becoming more efficient as they grow. Their operating margin (operating income / revenue) was 10.8% in 2018 and 11.1% in 2019. This indicates that Nike is generating good profits from their operations.

Nike’s net income has also been growing steadily over the past few years. In 2018, they had a net income of $3.73 billion, and in 2019 this increased to $4.54 billion. This shows that Nike is a profitable company that is growing at a healthy rate.

Overall, Nike seems to be a good investment for the next few years. They are a profitable company with steady growth, and their operating margin indicates that they are becoming more efficient as they grow.

Free Cash Flow Analysis

Nike Inc (NKE) is a publicly traded company on the New York Stock Exchange (NYSE). As of June 2019, Nike’s market capitalization was $128.2 billion.

Nike is a global leader in the design, development, and manufacturing of athletic footwear, apparel, and equipment. The company operates in more than 170 countries and employs more than 76,000 people worldwide. Nike’s products are sold through a network of retail stores, distributors, and e-commerce websites.

Nike has consistently generated strong free cash flow over the past decade. In 2018, Nike’s free cash flow was $4.7 billion. This represents an increase of nearly 50% from 2017. Nike’s strong free cash flow allows the company to reinvest in its business and pay dividends to shareholders.

Nike’s share price has been on a tear in recent years, rising from $50 in 2013 to over $80 in 2019. With strong fundamentals and a history of strong free cash flow, Nike looks like a good investment for the next few years.

Valuation and Share Evaluations

Nike Inc (NKE) is currently trading at a price to earnings (P/E) ratio of 25.3, which is relatively high compared to the industry average of 22.4. However, this doesn’t necessarily mean that Nike is overvalued. In fact, when we compare Nike’s P/E ratio to its historical average P/E ratio of 23.5, we can see that it’s actually trading at a discount right now.

Similarly, Nike’s price to book (P/B) ratio of 9.3 is also relatively high compared to the industry average of 6.4. However, once again, when we compare Nike’s P/B ratio to its historical average P/B ratio of 7.1, we can see that it’s actually trading at a discount right now.

In terms of share evaluations, Nike has a market capitalization of $160 billion and an enterprise value of $171 billion. Its52-week range is $50.87-$85.25 per share, and its dividend yield is 1%. Based on these numbers, Nike appears to be a fairly ‘safe’ investment with potential for future growth.

5 Year Stock Forecast

Nike Inc (NYSE: NKE) is one of the world’s leading sports apparel and footwear companies. The company designs, develops, and markets a wide range of products for both professional and amateur athletes.

Nike’s stock has been on a tear in recent years, rising from around $50 per share in 2013 to its current level of over $90 per share. This impressive run has made Nike one of the best-performing stocks in the Dow Jones Industrial Average over the past five years.

Looking ahead, Nike is expected to continue to perform well as it benefits from strong global demand for its products. Analysts currently have an average price target of $103.50 for Nike’s stock, which would represent a gain of around 15% from its current level.

Overall, Nike looks like a good stock to buy for the next few years. The company is benefiting from strong global demand for its products and is expected to continue to post solid growth.