Investment Thesis
Nike faces significant operational headwinds with revenue declining 9.8% YoY and net income plummeting 43.5% YoY, indicating both top-line weakness and margin compression. While the company maintains a solid balance sheet with strong liquidity (2.06x current ratio) and modest leverage (0.50x debt/equity), deteriorating profitability metrics and weak free cash flow generation (1.7% FCF margin on declining revenues) suggest the company is struggling with fundamental business challenges rather than temporary cyclical pressures.
Strengths
- Strong balance sheet with $7.0B cash position and manageable debt load
- Healthy liquidity ratios (current ratio 2.06x, quick ratio 1.83x) provide operational flexibility
- Gross margin of 41.4% remains respectable despite revenue pressures, indicating brand pricing power
Risks
- Sharp revenue decline of 9.8% YoY signals demand weakness or market share losses
- Net income collapsed 43.5% YoY with EPS down 42.1%, indicating severe margin deterioration beyond revenue decline
- Weak free cash flow of $401M on $24.1B revenue (1.7% FCF margin) limits financial flexibility and dividend capacity
- Operating margin compression to 8.0% reflects operational efficiency challenges
Key Metrics to Watch
- Revenue trend reversal and same-store sales growth
- Gross margin stabilization and operating leverage recovery
- Free cash flow expansion and cash conversion cycle improvement
Financial Metrics
Revenue
24.1B
Net Income
1.5B
EPS (Diluted)
$1.03
Free Cash Flow
401.0M
Total Assets
37.8B
Cash
7.0B
Profitability Ratios
Gross Margin
41.4%
Operating Margin
8.0%
Net Margin
6.3%
ROE
10.8%
ROA
4.0%
FCF Margin
1.7%
Balance Sheet & Liquidity
Current Ratio
2.06x
Quick Ratio
1.83x
Debt/Equity
0.50x
Debt/Assets
0.0%
Interest Coverage
N/A
Long-term Debt
7.0B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-19T19:32:19.372602 |
Data as of: 2025-11-30 |
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