QS Research · Michael Burry's Scion Capital analyst template · 2006
NIKE, Inc. (NKE)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -40% · upside +68%
NIKE is not a broken business, but the TTM base already reflects $3.09B net income, $4.60B EBITDA and $2.10B FCF, so at 7.4x EV/EBITDA and 10.7x P/E (N28, N31) the market is pricing a cash-generative franchise at a low-teens earnings multiple while the FY2027 guide calls for a high-single-digit revenue decline and adjusted EPS of $1.15-$1.35 versus FY2026's $2.10 (S102). The same-base arithmetic is: base 7.4x x $4.60B = $34.04B EV, less $0.99B net debt = $33.05B equity, about today's $33.01B market cap; downside at LULU's 4.5x gives $20.70B EV, $19.71B equity, -40%; upside at VFC's 12.3x gives $56.58B EV, $55.59B equity, +68% (N14, N24, N8, S1). The risk/reward is wide but the downside case is worse than -25% and the base case is not +30%, so the rule makes this a watch, not a long; the catalysts are Pace savings and margin recovery, but the cash-flow constraint (TTM dividends $2.43B vs FCF $2.10B) and China/Digital weakness keep conviction low. I use section 13's TTM base rather than normalized cycle earnings because the valuation mode is secular.
Key numbers
- Share price: $38.59
- Market cap: $33.01B
- Latest financial period: TTM to Aug 31, 2026
- Revenue (TTM): $45.89B
- EV / EBITDA (TTM): 7.4x
- P/E (TTM): 10.7x
- Price / book: 2.17x
The 15 boxes
- ✓ 1. Long-form business notes
NIKE designs, develops and globally markets and sells athletic footwear, apparel, equipment and accessories, selling both direct (NIKE Direct stores and digital) and through wholesale accounts, distributors and licensees, with nearly all footwear/apparel made outside the U.S. and the majority of products sold outside the U.S. (FY2021 and FY2026 10-Ks). On the six fiscal years of XBRL data, revenue ran $44.54B (FY2021) to a $51.36B peak (FY2024), fell to $46.31B (FY2025) and was essentially flat at $46.40B (FY2026), while net income went from $5.73B (FY2021) and $5.70B (FY2024) to $3.11B (FY2026). The change across the window is a smaller, less cash-generative business: operating cash flow $2.87B and buybacks $146.0M in FY2026 versus $7.43B and $4.25B in FY2024, with diluted shares down to 1,481.0M from 1,609.4M. The latest 10-K excerpt supplied is risk-factor and cybersecurity text, so FY2026 segment, channel and unit-economics detail is not in these sources.
- ✓ 2. Competitive advantage
NIKE's 10-K claims a durable brand/IP and scale advantage: it calls itself the largest seller of athletic footwear and apparel and says its NIKE and Swoosh trademarks are among its most valuable assets, registered in over 190 jurisdictions. But the financial record is not one of widening advantage: gross profit and net income fell sharply from FY2024 to FY2025 and stayed near those lower levels in FY2026, while the 10-K names a long list of global competitors and calls intense competition a significant risk. The sources show brand/IP and scale claims, not a demonstrated cost or network advantage.
- ✓ 3. 10-Q takeaways
Q1 FY2027 (quarter ended 2026-08-31) was a shrinking top line with a better gross margin: revenues $11,213 million, down 4% reported and 5% currency-neutral, with NIKE Direct down 8% (Digital -13%), Greater China down 22% reported, and Converse down 28%. Gross margin rose 60 bps to 42.8% on lower warehousing and logistics costs, SG&A fell 3%, and net income was $712 million (-2%) with diluted EPS of $0.48. The earnings release gave hard FY2027 guidance — revenues down high-single digits, adjusted diluted EPS of $1.15 to $1.35 excluding about $0.15 of Pace restructuring — plus roughly $1.0 billion of Pace pre-tax charges and $2.5 billion of cumulative savings through FY2031. No shares were repurchased in the quarter; inventories rose 5% versus 2026-05-31 but were down 3% versus 2025-08-31.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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