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Back of Napkin

NIKE, Inc. NKE

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The bet you're really making is that Nike, the swoosh on the shoes and the gear, gets people paying full price again instead of waiting for a markdown. You're betting the brand still has pull, so as three years of discounted inventory clears out, each pair sold earns more than it did last year. Right now it is turning: sales have stopped falling, and last quarter profit jumped to $1.1 billion, its best in over a year, even as revenue slipped to $11.0 billion. You pay about 18 times last year's earnings, less than the stock has cost in any of the twelve years the data covers.

Key data

Price$38.40
52-week range$37.95 to $76.97
P/E, trailing / forward18.3x / 17.6x (FY2028E)
EV/EBITDA12.8x

NKE · price with moving averages

Daily · 6MWeekly · 3Y
$31$55$80$104$128 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

Nike designs and sells athletic shoes, apparel and gear under the swoosh, plus Jordan and Converse. It makes money two ways: wholesale to retailers like Foot Locker and Dick's, and straight to the customer through its own stores, app and website. The direct channel carries the fatter margin, and the previous management bet the company on it, pulling back from wholesale partners to lean on its own digital storefront. That bet misfired. Cutting off wholesale shelves handed the space to Hoka, On and a revived Adidas, and the digital push turned into a discount machine, clearing product at markdown and teaching Nike's best customers to wait for a sale. The moat is the brand itself, the willingness of a teenager to pay $150 for shoes that cost a fraction of that to make, and that willingness frays when the shoes are always on sale. The current fix is to rebuild wholesale relationships and get back to full-price selling. What you are buying is that repair, priced as if it will not happen.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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