Key Points
Nike’s CEO believes that the business is in the “middle innings” of its turnaround.
Financial results will continue to be disappointing in the near term, but Nike’s brand power can’t be denied.
Although shares are cheap based on the P/S ratio, this stock is risky right now.
- 10 stocks we like better than Nike ›
Investors in Nike (NYSE: NKE) wish to forget about the past five years. Since early January 2021, this consumer discretionary stock has seen its price collapse 55% (as of Jan. 8). For a business that inspires athletes to perform their very best, Nike has been failing in a remarkable fashion. But it’s hoping it can turn things around.
Shares currently trade 63% below their peak. But where will Nike be in five years?
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Image source: Nike.
CEO Elliott Hill has a lot of work to do
As was the case with many other companies, the COVID-19 pandemic fundamentally changed Nike’s strategic priorities. Consumer behavior changed, as people leaned more toward shopping online and away from the physical retail experience. This shift had an immense effect on Nike’s vision.
The previous leadership focused on core franchise products, like the Air Force 1, Air Jordan 1, and Nike Dunk, whose excessive supply might have led to these items losing their “cool” factor. Nike also pushed aggressively into the direct-to-consumer e-commerce channel, while simultaneously cutting ties with some third-party retail accounts. The rise of competitor products also hasn’t made things easy.
As the economic backdrop and consumer behavior normalized, Nike was not positioned well to keep up its momentum in a post-pandemic world. Sales and profits have been under immense pressure, explaining the stock’s fall.
Elliott Hill, who took over the CEO job in October 2024, has implemented a “Win Now” strategy that emphasizes product innovation based on different sports, fostering better relationships with wholesale accounts, and strengthening the brand.
“I’d say we’re in the middle innings of our comeback,” Hill said on the second-quarter 2026 earnings call.
Turnarounds are never easy. And they don’t always result in the desired outcome. This challenge introduces a high level of uncertainty for prospective investors who are interested in Nike as a possible portfolio addition.
Will Nike’s revenue and profits be higher in 2031?
Consensus analyst estimates call for Nike to collect $46.7 billion in revenue in fiscal 2026 (ending in May), with earnings per share coming in at $1.56. The top line would represent a 0.9% year-over-year increase, while the bottom line would be a huge 28% decline. These certainly aren’t encouraging trends.
Over the next year or two, investors must be comfortable with the ongoing struggles continuing. For one, Nike is dealing with the negative effects of tariffs. In Greater China, historically Nike’s fastest-growing market, revenue fell 16% in Q2. Competition is stiff worldwide, and there’s soft consumer confidence in the U.S.
Long-term investors must keep their attention on the next five years, though. This mental framework begs the question of whether or not Nike’s revenue and profits will be higher in fiscal 2031 than they will be in fiscal 2026.
One undeniable reason to be optimistic is that Nike has a key intangible asset in its brand that supports its competitive position, global visibility, and pricing power. It still has leading market share in the worldwide sportswear industry. Given its scale, it possesses more resources than rivals to invest in marketing and research and development efforts. People will always want to gravitate to the shiny new object. But Nike has what it takes to get back on track.
Nike is a high-risk, high-reward investment opportunity
With shares being so far below their peak, Nike isn’t an expensive stock to buy. It trades at a price-to-sales ratio of 2.1. That represents a 40% discount to its trailing 10-year average of 3.5, and it indicates just how much the market has soured on the business and its prospects.
Low expectations like this mean that investors have higher upside should Nike eventually start to report improving financial results. The problem is that this could take a while.
Therefore, buying the stock today is a high-risk, high-reward proposition. Five years from now, Nike could work out to be an extremely successful investment. There is just a lot of uncertainty, so investors should think things through before making a decision.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
