The era of Nike (NKE) in the S&P 100 will come to its end on Sept. 21. After being in the index for nearly 18 years, Nike will give up its place to Palo Alto Networks (PANW) as a result of the quarterly rebalancing of the index. The changes will take effect before the market opening on that day.
Despite the removal from the S&P 100, the sportswear manufacturer will still be included in the wider S&P 500 Index ($SPX). However, it could be considered symbolic, as the stock lost approximately half of its market value during the last year owing to poor digital performance, issues in China, and a complicated turnaround. At the same time, all the four newly added S&P 100 stocks belong to the technology industry.
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About Nike Stock
Based in Beaverton, Oregon, Nike designs and distributes athletic footwear, apparel, equipment, and accessories under such brands as Nike, Jordan, and Converse. Being one of the market leaders in the consumer growth stories, Nike now has a market cap of about $55 billion.
The decline in the value of the company's shares has been quite significant. At around $37, NKE is trading just above its 52-week low of $36.98 and more than 51% below its 52-week high of $76.97. During the past 52 weeks, the stock has lost about half of its value, seriously underperforming the market.
www.barchart.com The reduced share price certainly has affected the valuation of Nike; however, the stock is not necessarily cheap. NKE stock trades at about 22x forward price-to-earnings (P/E) and 1.2x sales. That forward P/E ratio demands the investors to pay the premium for the recovery while Nike Direct revenue decreases and earning growth becomes questionable. In other words, most of the old valuation premium has gone away, but the execution now matters more.
There is one increasingly attractive aspect—income. The annualized dividend of $1.64 per share corresponds to the forward yield of about 4.3% based on the current share price. The most recent declared quarterly dividend was $0.41 per share.
Nike Beats on Earnings, but the Turnaround Is Still a Work in Progress
Nike managed to beat the estimates in its fiscal fourth-quarter results. The adjusted earnings per share came in at $0.20 versus the estimated $0.11, while revenue of about $11.0 billion exceeded the expectations of $10.85 billion. However, the revenue still decreased 1% year-over-year on the reported level and 4% on a currency-neutral basis.
The numbers tell why the investors remain cautious. The revenue in the wholesale channel grew 4% to $6.6 billion, which looks quite promising as Nike rebuilds the relationships with its wholesale partners. However, the Nike Direct revenue decreased 7% to $4.1 billion, including the 12% fall in Nike Brand Digital. An even worse situation was observed for Converse—its revenue plunged 32%. For the entire fiscal year, the company posted $46.4 billion in revenue, which is practically flat year-over-year (YoY).
The reported gross margin increased 890 basis points to 49.2%, but here again the context matters. The company has recognized $986 million in benefits from the expected recovery of IEEPA tariffs, which added about 900 basis points to the quarterly gross margin. The reported diluted EPS of $0.72 has also contained the $0.52 benefit from the tariffs' recovery. Excluding that factor, the EPS was $0.20.
The situation looks mixed from the operational standpoint. Nike Direct revenue fell 6% for fiscal 2026, while the revenue in the wholesale channel increased 6%. It means that the efforts of the company to restore its wholesale presence are becoming successful, but digital weakness and continued difficulties in Greater China are still evident.
For the next quarter, the analysts tracked by Barchart are expecting the EPS of $0.45, which is about 8% below the year-ago figure. Nike has announced that it will release the fiscal Q1 2027 results on Oct. 1 after the market close.
What Do Analysts Expect for NKE Stock?
Analysts assign NKE stock a "Moderate Buy" rating consensus rating. The price targets tell a bit of a different story, as NKE has the mean target of $49.98 and the Street-high target of $75. That mean target presents about 33% upside potential from the current $37 share price. The high target suggests a possible 103% increase.
www.barchart.com On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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