NIKE Stock Rises 5.8% YTD on Effective Plans: Right Time to Invest?

NIKE Inc. NKE stock has shown a marked recovery in the year-to-date period, with shares rising as much as 5.8%. With this increase, the company’s shares have outpaced the broader Shoes & Retail Apparel industry and the Consumer Discretionary sector’s growth of 3.4% and 3.3%, respectively. Also, the NKE stock has surpassed the S&P 500’s growth of 0.9% in the same period.This Beaverton, OR-based athletic shoes and apparel retailer’s shares have shown recovery trends after recording a significant downside in 2024. The NKE stock has lost 23% in the past year and 32.5% in the past two years.NIKE’s YTD Stock Performance Image Source: Zacks Investment Research At the current share price of $80.02, NIKE trades close to its 52-week low mark of $68.62. The stock price reflects an 16.6% premium to the company’s recent 52-week low. Meanwhile, the NKE stock’s price reflects a 23% discount from its 52-week high of $103.94. NIKE trades above its 50 and 200-day moving averages, indicating a bullish sentiment.NIKE Stock Trades Above 50-Day & 200-Day Moving Averages Image Source: Zacks Investment Research What’s Behind NKE Stock’s Recovery?NIKE has long been a dominant force in the Shoes and Retail Apparel industry. Has NIKE’s comeback been fueled by CEO Elliot Hill’s strategies? Let us elaborate.NKE’s recent share performance has benefited from CEO Elliott Hill’s strategies aimed at revitalizing the brand and driving sustainable growth.A key aspect of his strategy is transitioning NIKE’s digital platform to a full-price model while reducing the reliance on promotional activity. This shift is designed to strengthen brand positioning and profitability, aligning with NIKE’s premium market status. The company is scaling back performance marketing investments, focusing instead on organic consumer engagement and improved shopping experiences. These efforts are expected to create long-term value, even as they lead to some short-term revenue challenges.NKE is refining its production and distribution strategy, particularly by adjusting timelines and reducing the supply of select classic footwear franchises. This move is aimed at maintaining exclusivity and demand while ensuring a healthier inventory position. However, this recalibration has resulted in a faster decline in classic footwear sales, contributing to revenue headwinds in fiscal 2025.Despite these near-term pressures, NKE’s focus on premium pricing, inventory management and digital transformation under Hill’s leadership is positioning the company for stronger long-term profitability and market dominance.As part of its recovery drive, this month, NIKE signed a partnership with SKIMS, the brand co-founded by Kim Kardashian and Jens Grede. This collaboration will introduce NikeSKIMS, a shoe and athletic wear range focused on women. This innovative brand merges performance-driven technology with body-conscious design, aiming to disrupt the global fitness and activewear industry.NIKE’s Estimate Revision TrendThe Zacks Consensus Estimate for NKE’s fiscal 2025 EPS moved up by a penny in the last seven days, while the same for fiscal 2026 EPS was unchanged. The downward revisions in earnings estimates indicate analysts’ reduced confidence in the stock.For fiscal 2025, the Zacks Consensus Estimate for NKE’s sales and EPS implies year-over-year declines of 9.8% and 47.9%, respectively. For third-quarter fiscal 2025, the consensus mark for sales and EPS indicates 10.3% and 71.4% year-over-year declines, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research Will NKE’s Recent Momentum Last?While investors are encouraged by NIKE’s progress on its long-term strategy, a full recovery from ongoing challenges may take time. NKE has seen sustained softness in its lifestyle segment, alongside a drop in digital revenues, indicating shifting consumer preferences. The company faces declining retail traffic and sell-through rates in Greater China, which has been a focal point for its global strategy. These issues have led to slower revenue growth and compressed profit margins.NKE has experienced sluggish sales trends in its lifestyle segment, including men's, women's and Jordan. Supply-chain disruptions and reliance on Asia manufacturing continue to expose NIKE to geopolitical risks and labor shortages, affecting its operations. Inventory management remains another critical focus.NIKE acknowledged that inventory levels remain higher than expected, particularly in NIKE Direct, though partner-owned inventory has declined from the previous year. In response, the company is aggressively reducing aged inventory, aligning supply with demand in NIKE Digital, and ensuring sufficient marketplace capacity for its latest product assortments.As part of its quarterly guidance, NKE projects a low-double-digit revenue decline for third-quarter fiscal 2025, reflecting the impacts of strategic shifts, foreign exchange headwinds and restructuring efforts. The gross margin is expected to contract 300-350 basis points year over year, while SG&A expenses are anticipated to decline slightly due to prior-year restructuring charges.While NIKE is actively repositioning its product strategy and addressing inventory challenges, near-term headwinds remain concerning. Investors should monitor the company's ability to stabilize sales, improve margins, and navigate its digital and international transitions before making investment decisions.Premium Valuation for NIKE StockNKE is currently trading at a forward 12-month P/E multiple of 35.36X, exceeding the industry average of 28.4X and the S&P 500’s average of 21.64X.NIKE also trades at a premium to its close competitor, lululemon athletica inc. LULU, which has a forward 12-month P/E multiple of 23.32X. NKE’s valuation is also higher than that of other industry peers, including Adidas ADDYY and Skechers’ SKX multiples of 29.08X and 13.32X, respectively.Though trading much below its five-year high of 48.27X, the current valuation may be considered expensive, given the significant downside risks if the company's ongoing perils are not resolved for a prolonged period. Image Source: Zacks Investment Research Is NKE’s Stock Recovery a Buy Opportunity?NIKE’s recent stock gains reflect investor confidence in its strategies, signaling a long-term recovery and growth trajectory. The company is doubling down on its sports-focused approach, accelerating product innovation and expanding key offerings to reinforce brand strength.Additionally, NKE is refining its marketing strategy with more impactful storytelling and a premium marketplace experience, aligning closely with evolving consumer preferences. These efforts are aimed at revitalizing demand and sustaining competitive differentiation.However, NIKE’s premium valuation, coupled with slowing growth, raises concerns about the near term. Weaker third-quarter fiscal 2025 guidance has tempered growth expectations, while uncertainties persist around the recovery of its lifestyle segment and ongoing challenges in Greater China.Given these headwinds, investors may consider a cautious approach as NKE works through its strategic transition and macroeconomic pressures. NIKE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report Skechers U.S.A., Inc. (SKX): Free Stock Analysis Report lululemon athletica inc. (LULU): Free Stock Analysis Report Adidas AG (ADDYY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks