NKE Nike, Inc.
Iconic brand mid-turnaround; at $34 the price roughly matches a modest margin recovery to 11.5%.
The story
Nike remains the world's dominant athletic brand, with unmatched scale in marketing, athlete endorsements, and global distribution, but it is in the middle of a turnaround. Revenue has shrunk from about 51B to 46B, and margins have compressed to about 8% because of wholesale rebuilding, discounting to clear inventory, and tariff costs. This is a mature franchise trying to win back product heat against On, Hoka, and Adidas. TTM revenue has stabilized at 46.4B, but there is no clear evidence yet that margins are recovering.
No facts have changed materially since 2026-09-25: revenue is flat at 46.4B and the margin is still about 8.2%, so I keep every driver. An 11.5% target margin assumes Nike only gets back to its pre-slump level, not its old 13-15% peak, which reflects tariff headwinds and a heavier promotional mix. A sales-to-capital ratio of 2.0 matches the current 2.03, and an 8-year horizon fits a mature brand with a real but contested moat.
Value drivers
| Revenue growth (Y1) | 2.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 8y |
| Target operating margin | 11.5% |
| Years to target margin | 5 |
| Sales-to-capital | 2.00 |
| Beta | 1.00 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 9.2% |
Valuation bridge
| PV of explicit FCFF | 20.15B |
| PV of terminal value | 32.83B |
| Equity value | 51.55B |
| ÷ shares → per share | $34.81 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 47.33B | 2.0% | 8.8% | 3.34B | 463.98M | 2.87B | 2.63B |
| 2 | 48.34B | 2.1% | 9.5% | 3.66B | 507.06M | 3.16B | 2.65B |
| 3 | 49.45B | 2.3% | 10.2% | 4.01B | 552.46M | 3.46B | 2.65B |
| 4 | 50.65B | 2.4% | 10.8% | 4.37B | 600.40M | 3.77B | 2.65B |
| 5 | 51.95B | 2.6% | 11.5% | 4.76B | 651.16M | 4.11B | 2.64B |
| 6 | 53.36B | 2.7% | 11.5% | 4.89B | 705.01M | 4.19B | 2.47B |
| 7 | 54.88B | 2.9% | 11.5% | 5.03B | 762.26M | 4.27B | 2.30B |
| 8 | 56.53B | 3.0% | 11.5% | 5.18B | 823.24M | 4.36B | 2.15B |
Key risks
- Tariff costs become permanent and cap gross margin recovery below 11%
- Share keeps shifting to challenger running and lifestyle brands (On, Hoka, Adidas)
- China weakness and heavy wholesale discounting extend the turnaround past 2027
Catalysts
- Inventory cleanup completes and gross margin expands in coming quarters
- Product innovation wins in running, plus a lift from the 2026 World Cup