Valued at a market cap of $58 billion, Nike is among the worst-performing stocks on the S&P 500 over the past decade. Nike (NKE) stock is down almost 80% from all-time highs and trades at a 12-year low.
The ongoing pullback has raised the forward dividend yield to 3.7%, making it attractive to income-seeking investors.
Let’s see if the footwear giant is a bargain buy or a value trap at current valuations.
Why Nike stock is under pressure
Nike’s revenue has dropped from $51.2 billion in fiscal 2023 (ended in May) to $46.4 billion in fiscal 2026. Moreover, its operating margin has narrowed from 15.6% in fiscal 2021 to 8.2% in fiscal 2026.
In fiscal Q4 of 2026, Nike posted revenue of $11 billion, down 1% on a reported basis and 4% on an adjusted basis.
Diluted earnings per share of $0.72 looked strong on paper, but that number was inflated by a $0.52 per share one-time benefit tied to an expected tariff recovery.
Strip that benefit out and the underlying picture is far less flattering.
Nike’s management pointed to a low- to mid-single-digit revenue decline expected for the first quarter of fiscal 2027, with earnings per share roughly flat over the next three quarters once tariff-related gains are excluded.
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In a note shared by Yahoo Finance, Evercore ISI analyst Michael Binetti, covering Nike stock, offered a warning.
“No hints yet that revenues can turn positive in the foreseeable future; we don’t see a clear reason to expand the P/E ratio from here (from 22x FY27 consensus EPS).”
NBA star and longtime Nike athlete LeBron James told Yahoo Sports the brand needs to reconnect with its roots.
“You gotta get back into the roots, you gotta get back to being out in the inner city, having runners, when I was coming up, you had people that was literally out in the communities talking to these younger generations, asking them what they like, what they don’t like,” James said, according to the Boardroom interview.
Nike stock price target debate heats up
Nike is focusing on cost savings to improve profit margins. In Q4:
- Nike reduced its cost of sales by 16%, improving gross margins to 49.2% from 40.3% over the last 12 months.
- Gross profit rose 21% despite falling sales, driven by tariff refunds.
- Adjusting for tariff refunds, its gross margins stood at 40.2%, 10 basis points lower than the prior quarter.
- Gross margin beat management’s guidance, which expected a decline of at least 25 basis points.
Management now expects gross margin to start expanding in the first quarter of fiscal 2027, earlier than originally planned, suggesting that supply-chain fixes are starting to show up in the numbers.
The improvement echoes what Nike’s finance chief told analysts on the company’s earnings call.
“I would say that our performance this quarter has given us increasing confidence that our margins are stabilizing and that we’re starting to see a pathway back towards gross margin expansion,” Matt Friend, Nike’s outgoing chief financial officer, said on the call.
He added that improved discounts in North America, along with lower sales-related reserves, cancellations, and markdowns, drove much of the progress.
The ongoing drawdown has meant that Nike stock trades at a forward price-to-earnings multiple of 22.3x, below its 10-year average of 31.1x.
According to consensus data compiled by Tikr.com. analysts tracking Nike stock forecast adjusted earnings per share to expand from $1.58 in fiscal 2026 to $5.13 in fiscal 2031. If Nike stock is priced at 25x earnings, it could almost triple from current levels.
What next for Nike stock price?
While Nike Sportswear and Jordan streetwear keep dragging on results, Nike’s running category has posted five straight quarters of double-digit growth, helping the brand gain five points of market share across Western Europe and North America.
Nike is among the most recognizable brands globally and is wrestling primarily with product mix.
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CEO Elliott Hill has leaned into that distinction repeatedly, pointing to the company’s new Sport Offense structure, built around small teams focused on individual sports like running, basketball and football, as the reason performance categories are recovering faster than lifestyle ones.
Sportswear and Jordan are still expected to decline through fiscal 2027, China remains a multi-year project, and tariffs are still an unpredictable cost.
Nobody should pretend otherwise. But the pieces investors usually look for early in a turnaround are showing up.
Margins are stabilizing, the running category is growing fast enough to matter, and management is guiding to earlier-than-expected margin expansion.
And the stock is priced closer to a value bet than a growth story.
If Nike meets the numbers analysts already expect, patient investors buying near these levels could be rewarded over the next few years. If the Sportswear and China problems drag on longer than management hopes, the stock could stay cheap for a while longer, too.
Nike will lay out its next chapter at its Investor Day on Nov. 16 and 17, and that event should offer the clearest read yet on which version of this story plays out.
Out of the 15 analysts covering Nike stock, eight recommend “Buy,” 15 recommend “Hold,” and two recommend “Sell.” The average NKE stock price target is $50, indicating an upside potential of 31% from current levels.
