NIKE, Inc. · NKE · NYSE
My estimate (a forecast, not a fact)
USD 23.14 / share
Market price, 1 Oct 2026
USD 35.15
Difference
−34.2%
What Nike does
Nike sells athletic shoes and sports apparel, about two-thirds shoes. Over the last 12 months it took in $45.9 billion, nearly half of it in North America. It doesn't make its own shoes. Manufacturing is outsourced, so Nike needs very little capital to grow. It sells to retailers and through its own stores and app, and right now it's moving back toward retailers.
Is Nike wrongly valued?
Nike has been shrinking. Revenue peaked at $51.4 billion in fiscal 2024. The operating margin fell from 15.6% in 2021 to about 8% today, and that 8% includes a one-off $986 million tariff refund. Without it, the margin is about 6%. On 1 October, after the close, Nike cut its outlook again: revenue is now expected to fall by high-single digits this year.
The market is paying for a turnaround that works and a brand that keeps earning far more than its cost of capital forever. I'm a believer in the turnaround, but not in the "forever" part.
The drivers behind the number
I value Nike with a discounted cash flow model: 10 years of forecasts and a terminal value after that. Revenue falls 8% next year, the middle of Nike's own outlook, is flat through year 5, and then grows back toward its markets. The operating margin drops to 6% next year and climbs to 10% by year 5. Tax goes from 20% to 25%. The cost of capital is 8.31%, rising to 8.94% after year 10.
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | After 10 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue growth | −8.0% | 0% | 0% | 0% | 0% | 1.0% | 2.0% | 3.0% | 4.0% | 5.0% | 5.02% |
| Operating margin | 6.0% | 7.6% | 8.4% | 9.2% | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% | 10.0% |
| Tax rate | 20% | 20% | 20% | 20% | 20% | 21% | 22% | 23% | 24% | 25% | 25% |
| Cost of capital | 8.31% | 8.31% | 8.31% | 8.31% | 8.31% | 8.44% | 8.56% | 8.69% | 8.81% | 8.94% | 8.94% |
| Return on capital | 18.0% | 8.94% |
Two assumptions carry this valuation.
The first is the target margin, 10%. That's Nike's own promise of double-digit margins, and it's what the industry earns, weighted by Nike's mix. Nike now has a cost programme, called Pace, aiming for $2.5 billion of savings through fiscal 2031. But tariffs stay, and selling through retailers earns less per shoe. So I don't get Nike back to its old 12% to 14%.
The second is the return on capital after year 10. Nike earns about 17% on its capital today, down from 41% in 4 years. I assume competition takes the excess away after year 10, so new growth earns only its cost of capital. That's a deliberate choice, and it costs a lot. If Nike kept earning 12% forever, my value would be $4.20 higher, at $27.34 a share.
There's a third, smaller one: growth. Nike has 12.6% of its markets today. On my numbers it has 8.3% in 10 years.
| Driver | My estimate | Alternative | Change/share | Value/share |
|---|---|---|---|---|
| All at my estimates | $23.14 | |||
| Target operating margin | 10% | 12% | +$4.75 | $27.89 |
| 8.6% | −$3.32 | $19.82 | ||
| Return on capital after year 10 | = cost of capital, 8.94% | 12% | +$4.20 | $27.34 |
| 16% | +$7.27 | $30.41 | ||
| Growth, years 2–5 | 0% | 1% | +$0.74 | $23.88 |
| −2.5% | −$1.71 | $21.43 | ||
| Market share | 12.6% today | 8.3% in year 10 |
The valuation
Base-year revenue is $45.9 billion, and $48.9 billion by year 10 at a 10% margin. The 10 years of cash flows are worth $18.3 billion today, and everything after year 10 another $19.1 billion. That's 51% of the total. Take off $11.1 billion of debt, add $8.4 billion of cash, take off $0.3 billion of employee options, and divide by 1.483 billion shares.
My estimate is $23.14 a share, against a market price of $35.15 at the close on 1 October 2026. Even my upbeat case, with a 12% margin and faster growth, comes to $28.88 a share.
| My estimate | Upbeat case | |
|---|---|---|
| Growth, years 2–5 | 0% | 1% |
| Target operating margin | 10% | 12% |
| Year-10 revenue | $48.9bn | $51.9bn |
| Value per share | $23.14 | $28.88 |
| Price, NYSE close 1 Oct 2026 | $35.15 | $35.15 |
| Price as % of value | 151.9% | 121.7% |
The full-length video walks through every assumption, the competitors, the upbeat case, and what would change my mind.
| Files Subscribe to download |
|---|
| Valuation model The FCFF model behind the estimate — every input, every year, and the value it produces. XLSX · 23 KB |
| Sensitivity table Value per share across two assumptions — revenues in year 10 and target pre-tax operating margin. XLSX · 85 KB |
| Market sizes The total addressable market size estimates for single- or multi-business companies — TAM size, CAGR, implied market share, sources, caveats, etc. XLSX · 55 KB |
| Nike financial statements Income statement, balance sheet and cash flow as reported in Nike's 10-K and 10-Q filings, with the last-12-months build and the valuation inputs taken from them. XLSX · 31 KB |
| Long-term debt Nike's bonds by maturity — book value, coupon and weight — behind the weighted interest rate and maturity of its debt. XLSX · 10 KB |
| Competitor comparison Revenue, growth and margins for Nike and 10 competitors, as reported and converted to US dollars at the 30 September 2026 spot rate, with sources. XLSX · 20 KB |
Sensitivity
Estimated value per share in USD, across the two assumptions that move it most. Rows are revenue in year 10 ($bn); columns are target pre-tax operating margin (%). Shaded cells clear the USD 35.15 price at publication.
My own case is highlighted — USD 25. Every row here grows revenue at a single constant rate to its year-ten figure, so it does not land exactly on my USD 23.14 estimate.
| Revenue in year 10 ($bn) | Target pre-tax operating margin (%) | ||||||
|---|---|---|---|---|---|---|---|
| 10 | 15 | 20 | 25 | 30 | 40 | 50 | |
| 34.3 | 21 | 30 | 39 | 49 | 58 | 77 | 95 |
| 41.6 | 23 | 34 | 45 | 55 | 66 | 88 | 110 |
| 48.9 | 25 | 37 | 50 | 62 | 74 | 99 | 124 |
| 56.3 | 27 | 41 | 54 | 68 | 82 | 110 | 138 |
| 63.6 | 29 | 44 | 59 | 75 | 90 | 120 | 151 |
| 78.3 | 32 | 50 | 69 | 87 | 105 | 141 | 178 |
| 95.5 | 36 | 58 | 79 | 101 | 122 | 165 | 208 |
Disclosure
- Position
- As at 1 October 2026, I own shares in Nike. This covers shares held by people closely associated with me. It is a snapshot: if it changes, it changes in a new valuation, never by editing this one. I hold no position, long or short, exceeding 0.5% of Nike's issued share capital.
- Author
- Lucian Mesaroș, independent equity analyst, sole author of this publication, publishing in a personal capacity as an individual. I am not authorised or supervised by the ASF or by any other financial supervisory authority, I am not an investment firm, and I do not provide investment advice.
- Valuation date
- 1 October 2026. First published 4 October 2026.
- Market price used.
- USD 35.15 — NYSE close, 1 October 2026 on NYSE, 1 October 2026. The percentage difference on this page compares my estimate to that price on that date, and is not updated afterwards.
- What the number is
- USD 23.14/share is my estimate of intrinsic value, produced by a discounted cash flow (FCFF) model. It is a forecast and an opinion, not a fact, not a price target I undertake to defend, and not a prediction of where the share price will go. A Damodaran free-cash-flow-to-the-firm discounted cash flow. Revenue is forecast for 10 years and grown to the risk-free rate, the operating margin converges to a long-run target, reinvestment is set by a sales-to-capital ratio, and the cash flows are discounted at the cost of capital, with a terminal value in which the return on capital equals the cost of capital. Lease liabilities are counted as debt and their interest is added back to operating income. The full framework is at Methodology.
- Key assumptions
- Revenue falls 8% in year 1, is flat through year 5, then grows in steps to the risk-free rate of 5.02% by year 10 · Operating margin of 6% in year 1, rising to a 10% target by year 5 · Sales to capital of 2.75 for all 10 years · Effective tax rate of 20% for 5 years, rising to the 25% marginal rate by year 10 · Cost of capital of 8.31% for years 1–5, rising to 8.94% after year 10 · Return on capital after year 10 equal to the cost of capital, 8.94% · Base year includes the $986 million tariff refund, with lease interest added back to operating income
- How wrong this can be
- Valuations are sensitive to assumptions I chose — the sensitivity table above shows what the estimate becomes when the two that matter most turn out differently. A small change moves the estimate materially. I can be, and have been, wrong.
- Time horizon
- At least 1 year, and normally far longer. I have no view on what the share price does over the coming weeks or months, and nothing here is a short-term call. Separately, this document stands until I next value Nike — see What I've Published.
- Updates
- I revalue a company when it publishes annual results, or when something material changes. There is no guaranteed schedule, and no undertaking to update this page.
- Conflicts of interest
- I have no agreement of any kind with Nike or with anyone connected to it, I have not been paid by anyone to produce this valuation, no one asked me to write it except through the public request page, no draft was shown to the company, and I am not a market maker, liquidity provider or adviser to it.
- Previous valuations of Nike
- None in the last 12 months.
- Sources
- NIKE, Inc., Form 10-K for the fiscal year ended 31 May 2026 · NIKE, Inc., 2026 proxy statement · NIKE, Inc., Q1 fiscal 2027 results release, 1 October 2026 · NIKE, Inc., 2026 letter to shareholders · Competitors' reported results, converted to US dollars at the 30 September 2026 spot rate · market-data.xlsx, the market-size estimates published with this valuation All figures are as reported by the company unless I say otherwise.
- Everything I have published in the last 12 months:
- What I've Published