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Nike (NKE): Rethinking Valuation After Q2 Beat, Weak China Outlook and Softer Guidance Hit Shares

Simply Wall St · 2d ago

Nike (NKE) just delivered a second quarter that topped revenue and earnings forecasts, yet the stock slid as investors fixated on softer guidance, margin pressure from tariffs, and persistent weakness in Greater China.

See our latest analysis for NIKE.

The reaction fits a broader pattern, with a 7 day share price return of minus 15.58 percent and a 90 day share price return of minus 19.33 percent reflecting fading momentum, while the 5 year total shareholder return of minus 56.86 percent shows how long the reset has been dragging on.

If Nike has you rethinking where growth and pricing power might show up next, this could be a good moment to explore other athletic names and brands via auto manufacturers

With shares down more than 20 percent this year, but still facing shrinking margins, slower China growth, and a long road back to peak profits, is NIKE now a contrarian buy, or is the market correctly discounting future upside?

Most Popular Narrative Narrative: 40.8% Undervalued

Compared with NIKE's last close at $57.22, the most followed narrative lands on a fair value in the mid 90s, which implies sizable upside if its assumptions hold.

With pretty conservative estimates I am seeing Nike hitting at least $100 roughly in 3 years. However this is with a revenue growth of 2%. I believe that leadership can help get that number closer to 5% within the next 2 years however, and that also is a conservative number. Nike is a staple brand that has been in a rough patch consequent of poor decisions within the company. However I really do feel like they can turn things around. For the stock to be worth it to me they would need to hit $103.68 in 3 years which would equate to a 20% annual return. When I look at everything and especially their high ROE I feel very comfortable that Nike can slowly inch towards that. Honestly I see them being closer to $120 within 3 years.

Read the complete narrative.

Want to see how modest top line growth, richer margins, and a premium future earnings multiple combine into that punchy upside case? The full narrative unpacks the exact levers behind this valuation jump, and the specific profitability assumptions that do most of the heavy lifting.

Result: Fair Value of $96.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this upside case could falter if China demand stays sluggish or if leadership missteps keep margins from recovering as quickly as hoped.

Find out about the key risks to this NIKE narrative.

Another View: Market Based Signals Look Rich

Our price to earnings work paints a tougher picture, with NIKE trading at 33.5 times earnings against a Luxury peer average of 29.1 and a fair ratio of 28.8. That premium hints at valuation risk, not a bargain, if growth or margins stumble again.

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:NKE PE Ratio as at Dec 2025
NYSE:NKE PE Ratio as at Dec 2025

Build Your Own NIKE Narrative

If you would rather dig into the numbers yourself or challenge these assumptions, you can build a fresh NIKE narrative in minutes: Do it your way

A great starting point for your NIKE research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.