NIKE, Inc.

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

NIKE, Inc. (NYSE: NKE) is engaged in the designing, marketing and distributing of athletic footwear, apparel, equipment and accessories and services for sports and fitness activities. The Company's operating segments include North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA).

Kalkine’s Diversified Opportunities Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has corrected by 7.50% in the last three months, on the other hand giving a return of 4.14% in past six months.
• The stock is in its lower band of its 52-week range of USD 107.43 and 52-week low price of USD 70.31. Post the announcement of Q3FY25 results the stock has corrected by approx. 4.50% with the current price inside an important support zone of USD 70.00 - USD 75.00.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 50.18.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~31.25% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and BlackRock Institutional Trust Company, N.A. are the biggest shareholders, holding the maximum stake in the company at ~9.31% and ~5.46%, respectively.

1.4 Key Metrics:

NIKE outperformed the industry median across several key profitability and efficiency metrics in Q3 FY25, despite having a slightly lower gross profit margin of 43.62% compared to the industry median of 44.31%. The company demonstrated exceptional operational efficiency, with its EBITDA margin (12.74%) and operating margin (11.20%) significantly exceeding the industry medians of 6.91% and 4.75%, respectively. Moreover, its income before tax margin (11.46%) and net margin (9.41%) outpaced the industry medians of 3.13% and 2.66%, reflecting robust bottom-line performance. NIKE also showcased strong cash generation and capital efficiency, with a free cash flow yield of 4.64% surpassing the industry median of 3.85%. Most notably, the company excelled in returns, achieving a return on average common equity of 34.67% and a return on invested capital of 22.20%, both significantly higher than the industry medians of 5.36% and 11.18%, respectively. This highlights NIKE's ability to generate superior value for shareholders and effectively leverage its resources.

Section 2: Business Updates and Corporate Business Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q3FY25:

Section 3: Key Risks & Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 7.50% in the last three months, on the other hand giving a return of 4.14% in past six months.
• The stock is in its lower band of its 52-week range of USD 107.43 and 52-week low price of USD 70.31. Post the announcement of Q3FY25 results the stock has corrected by approx. 4.50% with the current price inside an important support zone of USD 70.00 - USD 75.00.
• The price is currently trading below both its long-term (200-day) SMA and its short-term (50-day) SMA , with the current RSI of 50.18.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 22, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.