January 18, 2024
Top 10 Stock NIKE Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: NIKE – Top 10 Stock in Dow Jones Industrial Average
NIKE is listed as a top 10 stock on January 18, 2024 in the market index Dow Jones because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is growing above average, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 31 (31% performer), Obermatt assesses an overall hold recommendation for NIKE on January 18, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Footwear |
| Index | Dow Jones, S&P US Luxury, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View NIKE Hold
| 360 METRICS | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 9 |
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| GROWTH | ||||||||
| GROWTH | 75 |
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| SAFETY | ||||||||
| SAFETY | 39 |
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| SENTIMENT | ||||||||
| SENTIMENT | 45 |
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| 360° VIEW | ||||||||
| 360° VIEW | 31 |
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ANALYSIS: With an Obermatt 360° View of 31 (better than 31% compared with alternatives), overall professional sentiment and financial characteristics for the stock NIKE are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for NIKE. The consolidated Growth Rank has a good rank of 75, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. It ranks higher than 75% of competitors in the same industry. The other indicators are below average, namely the Value, Safety, and Sentiment Ranks.The Value Rank at 9 means that the share price of NIKE is on the high side compared with its peers regarding revenues, profits, and invested capital. The stock price is higher than for 91% of alternative stocks in the same industry. The consolidated Safety Rank has a riskier rank of 39, which means that the company has a riskier financing structure than 61% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. The consolidated Sentiment Rank also has a low rank of 45, indicating professional investors are more pessimistic about the stock than for 55% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 31, NIKE is worse than 69% of all alternative stock investment opportunities based on the Obermatt Method. As only one of the consolidated Obermatt Ranks exhibits excellent performance, namely the above-average growth (Growth Rank of 75), it is a riskier stock investment proposition. Aside from the critical professional market sentiment (Sentiment Rank of 45), the company is rather risky when it comes to financing (Safety Rank of 39). The negative market view on NIKE may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to join the party, they may drive stock prices above reasonable levels. While it is typical for growth companies to have low value, because investors are willing to pay more for companies that are expected to have high growth, the crucial question is: how much more do you pay for the stock of NIKE compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value (even though it is lower than 50). As market sentiment is critical, you should be careful with paying more than market-average for this stock and conduct further research into the company's future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for NIKE only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 45 (better than 45% compared with alternatives), overall professional sentiment and engagement for the stock NIKE is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for NIKE. Analyst Opinions are at a rank of 55 (better than 55% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 53, which means that currently, professional investors hold more stock in this company than in 53% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 84 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 84% of competitors). But Analyst Opinions Change has a below-average rank of 4, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in NIKE. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 45 (less encouraging than 55% compared with investment alternatives), NIKE has a reputation among professional investors that is below that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: NIKE Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 9 (worse than 91% compared with alternatives), NIKE shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for NIKE. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 63% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 9 which means that the stock price compared with what market professionals expect for future profits is higher than 91% of comparable companies, indicating a low value concerning NIKE's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 7 which means that the stock price compared with what market professionals expect for future profit levels is higher than 93% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 3 is also low. Compared with invested capital, the stock price is higher than for 97% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 9, is a sell recommendation based on NIKE's stock price compared with the company's operational size and dividend yields. Should dividend investors pick NIKE? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose NIKE only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: NIKE Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 75 (better than 75% compared with alternatives) for 2024, NIKE shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for NIKE. Sales Growth has a value of 67 which means that currently professionals expect the company to grow more than 67% of its competitors. Profit Growth with a value of 85 and Capital Growth with a rank of 52 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 37, which means that stock returns have recently been below 63% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 75, is a buy recommendation for growth and momentum investors. NIKE has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for NIKE, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: NIKE Debt Financing Safety below-average
| SAFETY METRICS | January 18, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 38 |
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| REFINANCING | ||||||||
| REFINANCING | 20 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 65 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 39 |
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ANALYSIS: With an Obermatt Safety Rank of 39 (better than 39% compared with alternatives), the company NIKE has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of NIKE is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for NIKE. Liquidity is at 65, meaning the company generates more profit to service its debt than 65% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 20, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 80% of its competitors. Leverage is also high at a rank of 38, which means that the company has an above-average debt-to-equity ratio. It has more debt than 62% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 39 (worse than 61% compared with alternatives), NIKE has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: NIKE Below-Average Financial Performance
| COMBINED PERFORMANCE | January 18, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 9 |
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| GROWTH | ||||||||
| GROWTH | 75 |
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| SAFETY | ||||||||
| SAFETY | 65 |
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| COMBINED | ||||||||
| COMBINED | 34 |
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ANALYSIS: With an Obermatt Combined Rank of 34 (worse than 66% compared with investment alternatives), NIKE (Footwear, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of NIKE are low in value (priced high) with a consolidated Value Rank of 9 (worse than 91% of alternatives), and are riskily financed (Safety Rank of 39, which means above-average debt burdens) but show above-average growth (Growth Rank of 75). ...read more
RECOMMENDATION: A Combined Rank of 34, is a hold recommendation based on NIKE's financial characteristics. As the company NIKE shows low value with an Obermatt Value Rank of 9 (91% of comparable investments are less expensive), investors should look at the other ranks. In this case, growth is expected to be above-average, better than 75% of comparable companies (Obermatt Growth Rank is 75). This is a typical case. Companies with above average growth tend to cost more than stocks with slower growth expectations. If this is a high-growth company, the low Obermatt Safety Rank of 39 is a good sign. The more debt a well-performing company has, the higher the returns to shareholders. However, if growth turns negative or interest rates increase, high debt may become a burden. If you believe the future is bright for NIKE, even a low-value company (in terms of its key financial indicators) can be a good investment. ...read more
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