What’s Happening With Nike Stock?

CHONGQING, CHINA NOVEMBER 30: People walk past a Nike retail store inside a commercial shopping mall on November 30, 2025, in Chongqing, China. Major international sportswear brands have been promoting winter apparel and seasonal collections as year-end shopping activity increases across urban retail centers. (Photo by Cheng Xin/Getty Images)

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Nike (NYSE: NKE) has not been keeping up with the wider market—its shares have decreased by approximately 15% in the last year while the S&P 500 has risen by 14%. With fiscal Q2 2026 earnings coming up on December 18, investors are pondering an important question: Is this a chance to purchase a globally dominant brand at a lower price, or an indication that more severe issues are still emerging? Nike’s decline indicates a potential for bargains, yet the fundamental aspects present a much more intricate narrative—one that requires a detailed examination before branding the stock as a value opportunity. Check, Buy or Fear Nike stock?

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Valuation: Surprisingly Pricey for a Struggling Giant

At first glance, one might assume that a stock that has declined this much would appear cheap—but Nike does not. Its price-to-sales ratio of 2.2, P/E of 35.6, and price-to-free-cash-flow ratio of 34.2 are all considerably higher than the broader S&P 500 benchmarks. In other terms, investors are still disbursing a premium—possibly due to brand strength or confidence in a turnaround. For value-driven investors, these price points are a clear reason for caution.

Growth: The Weakest Link

This is where the concerns begin to escalate. Nike’s revenue has not only slowed—it’s declining. Over the last three years, the revenue has contracted slightly on average. In the past twelve months, revenue has decreased by more than 7%, dropping from $50 billion to $46 billion.

In the most recent quarter, which displayed a modest 1.1% year-over-year growth, it trails significantly behind the broader market. This growth profile is not what investors expect from a brand of Nike’s caliber. A company that once led the athletic apparel industry is currently finding it challenging to regain its momentum.

Profitability: Margins That Don’t Inspire Confidence

Nike’s profitability presents a similar narrative. The operating margin stands at 7.4%—well below the S&P 500’s near 19%. Cash-flow and net-income margins also lag behind the market. The brand continues to generate billions in earnings and cash flow, but the margins are slim compared to peers and historical data. This is a red flag for investors anticipating bottom-line growth anytime soon.

For further details see: NKE Valuation Ratios, NKE Revenue Comparison, NKE Operating Income Comparison

Financial Stability: The Bright Spot in the Story

Now, for the positive news: Nike’s balance sheet remains very strong. Debt levels are manageable relative to its $97 billion market cap, and the company possesses a solid cash position that accounts for nearly a quarter of its total assets.

Financial strength is not a trivial point—it provides Nike with the flexibility to adjust its strategy, reinvest in innovation, and endure prolonged downturns. For long-term investors, this is significant support.

Downturn Resilience: A Mixed History

Nike has not been the most stable name during market fluctuations.

• During the 2022 inflation shock, the stock plummeted over 53%, more than double the market’s decline, and it has yet to recover that peak.
• In the 2020 pandemic, Nike dropped significantly but rebounded quicker than the S&P 500.
• In the 2008 financial crisis, it fell less than the market and recovered much sooner.

So, what does that indicate? Nike has the potential to recover—but not always in a consistent manner. And currently, with the stock still considerably down from its 2021 highs, investors must be realistic about its volatility. Read NKE Dip Buyer Analyses to learn how the stock has bounced back from significant declines in the past.

Bottom Line

Nike presents as a paradox at this moment, but the evidence tends to lean toward caution. While the stock is undervalued, sentiment remains low, and a strong balance sheet allows Nike the time to reassess its strategy, the fundamentals still pose warning signs: revenue growth is weak, margins are below both market and historical levels, and the valuation is steep for a company clearly in a restructuring phase. Brand strength alone cannot counterbalance the reality that the numbers do not yet support a recovery narrative. With earnings approaching, the report serves less as a catalyst and more as a test—and until Nike demonstrates it can reverse its negative trends, the stock’s situation appears more unattractive than promising.

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