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NIKE (NKE) Looks Cheap After Weak Results And Softer 2027 Guidance

Simply Wall St · 2d ago

NIKE (NKE) is under scrutiny after first quarter results showed softer sales and earnings per share, alongside new guidance that calls for a high single digit revenue decline in fiscal 2027.

Those softer results and the fiscal 2027 revenue guidance have fed into NIKE’s share price performance, with the stock now at US$35.33 and the 1-year total shareholder return down 46.05%, while the 5-year total shareholder return has fallen 75.47%. This points to fading momentum as investors reassess the risk around its turnaround story.

Contrast NIKE’s reset with peers that may have stronger momentum and balance sheet support by scanning our curated list of 32 high quality undervalued stocks.

So is NIKE’s steep share price reset mainly a verdict on weakening fundamentals after softer quarterly figures and cautious 2027 guidance, or has sentiment swung harder than the underlying business justifies and created a valuation gap to test next?

Most Popular Narrative: 14% Undervalued

NIKE last closed at $35.33 while the most followed valuation narrative, using a $41.00 fair value, sees meaningful upside from here at a 9.05% discount rate. That view leans on NIKE regaining its earlier profitability profile and treating today’s share price as roughly in line with no-growth earning power.

The core of the case is simple. At about $32, the market is paying roughly what Nike's stable-era earning power is worth with zero growth (about $32 a share). A buyer gets the brand's return to growth for free, but only if margins recover.

See why 28 investors see NIKE as 14% undervalued.

Result: Fair Value of $41 (UNDERVALUED)

Still, if Nike’s China reset drags on or the dividend keeps running ahead of free cash flow, this recovery narrative could unravel much faster than bulls expect.

Find out about the key risks to this NIKE narrative.

Next Steps

Sentiment around NIKE is clearly mixed, with sharp share price pressure on one side and recovery hopes on the other. Move quickly, stress test the story against the underlying numbers yourself, then weigh both the 2 key rewards and 1 important warning sign.

Looking for more investment ideas beyond NIKE?

NIKE’s reset may have your attention, but your portfolio deserves fresh candidates that match your goals, risk comfort, and income needs.

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.