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Let's talk about the popular NIKE, Inc. (NYSE:NKE). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$89.44 and falling to the lows of US$73.36. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether NIKE's current trading price of US$78.77 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NIKE’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for NIKE
What Is NIKE Worth?
According to our valuation model, NIKE seems to be fairly priced at around 16.53% above our intrinsic value, which means if you buy NIKE today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $67.60, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because NIKE’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will NIKE generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of NIKE, it is expected to deliver a relatively unexciting earnings growth of 4.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in NKE’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on NKE, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.