Nike (NKE) Stock Hasn't Been This Low Since 2013 - Time To Buy?

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The video discusses Nike's (NKE) stock performance and fundamental health. Historically, NKE has shown significant growth, but in the last year, its stock price has declined substantially, down approximately 77% over the past 5 years from its peak. This decline is attributed to strategic missteps, including an over-reliance on direct-to-consumer sales at the expense of wholesale partners and a perceived decline in product innovation, particularly in running shoes. Financials indicate a significant drop in earnings per share and free cash flow per share over the last 12 months compared to previous years. However, the company maintains a strong balance sheet with substantial cash reserves and low net debt to EBITDA and net debt to capital ratios. The interest coverage ratio remains high, indicating a solid ability to service debt. While the recent dividend yield is high at 4.77%, it is considered 'Borderline Safe' due to the increasing payout ratio, which has reached 134% for earnings and 115% for free cash flow in the last 12 months. This suggests that the company is paying out more in dividends than it is earning or generating in free cash flow. Despite these challenges, the company's strong brand, ongoing product innovation in areas like running shoes (Alphafly 3), and efforts to rebuild wholesale relationships are seen as potential catalysts for a turnaround. The forward P/E ratio is noted to be well below its historical norm, suggesting the stock might be undervalued. Investors are advised to monitor the company's ability to improve earnings and cash flow to sustain its dividend payout. The current price of $34.36 is seen as a potential entry point for a rebound, with a target price around $39.60, representing a roughly 15% increase. A failure to rebound and a drop below $25.00 would invalidate this bullish outlook.

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