Nike Is Down 15%, What’s Next?
Nike (NYSE: NKE) hasn’t been keeping pace with the broader market—its shares are down roughly 15% over the past year while the S&P 500 has climbed 14%. With fiscal Q2 2026 earnings around the corner on December 18, investors are asking a crucial question: Is this an opportunity to buy a globally dominant brand at a discount, or a sign that deeper problems are still unfolding? Nike’s slump suggests bargain potential, but the underlying fundamentals tell a far more complicated story—one that demands a closer look before calling the stock a value play. Check, Buy or Fear Nike stock?
That said, investing in a single stock carries high risk. The Trefis High Quality Portfolio is designed to reduce stock-specific risk while giving upside exposure. Separately see, What’s Behind Dollar Tree Stock’s 70% Surge?
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Valuation: Surprisingly Pricey for a Struggling Giant
At first glance, you might think a stock that’s fallen this much would look cheap – but Nike doesn’t. Its price-to-sales ratio of 2.2, P/E of 35.6, and price-to-free-cash-flow ratio of 34.2 all sit well above the broader S&P 500 benchmarks. In other words, investors are still paying a premium—perhaps because of the brand power or optimism about a turnaround. For value-driven investors, that pricing is a clear reason to hesitate.
Growth: The Weakest Link
Here’s where the concern grows. Nike’s revenue hasn’t just slowed—it’s shrinking. Over the past three years, the top line has contracted slightly on average. Over the last twelve months, revenue has fallen more than 7%, sliding from $50 billion to $46 billion.
Even the most recent quarter, which showed modest 1.1% year-over-year growth, trails far behind the broader market. This is not the growth profile investors expect from a brand of Nike’s stature. A company that once set the pace for the athletic apparel industry is currently struggling to regain momentum.
Profitability: Margins That Don’t Inspire Confidence
Nike’s profitability paints a similar picture. Operating margin sits at 7.4%—far below the S&P 500’s near 19%. Cash-flow and net-income margins lag the market as well. The brand still generates billions in earnings and cash flow, but the margins are thin relative to peers and history. This is a watch-out for investors expecting bottom-line acceleration anytime soon.
For more details see: NKE Valuation Ratios, NKE Revenue Comparison, NKE Operating Income Comparison
Financial Stability: The Bright Spot in the Story
Now, for the good news: Nike’s balance sheet remains rock solid. Debt levels are manageable relative to its $97 billion market cap, and the company holds a robust cash position representing nearly a quarter of its total assets.
Financial strength isn’t a trivial detail—it gives Nike breathing room to reset strategy, reinvest in innovation, and weather prolonged weakness. For long-term investors, this is meaningful support.
Downturn Resilience: A Mixed History
Nike hasn’t been the most stable name during market shocks.
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During the 2022 inflation shock, the stock collapsed over 53%, more than double the market’s decline, and it still hasn’t recovered that peak.
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In the 2020 pandemic, Nike fell sharply but bounced back faster than the S&P 500.
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In the 2008 financial crisis, it dropped less than the market and recovered much earlier.
So, what does that mean? Nike can bounce back—but not always consistently. And today, with the stock still down substantially from its 2021 highs, investors need to be realistic about its volatility. Read NKE Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Bottom Line
Nike is a paradox right now, but the evidence leans toward caution. While the stock is beaten down, sentiment is low, and a strong balance sheet gives Nike time to repair its strategy, the fundamentals still raise red flags: revenue growth is weak, margins remain below both market and historical norms, and the valuation is high for a company in clear turnaround mode. Brand strength alone can’t offset the fact that the numbers don’t yet support a recovery narrative. With earnings approaching, the report is less a catalyst than a test—and until Nike proves it can reverse its negative trends, the stock’s setup skews more unattractive than opportunistic.
Investors should weigh risks carefully and consider diversification. The Trefis High-Quality portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period — and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
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