Monday, March 13, 2017

Analysis of Nike 2017


Logo of Nike 2017

Company: Nike

Business: An American company that are selling and developing athletic footwear, apparel, equipment and accessories. They have several brands: Nike, Nike+, Hurley, Jordan Brand and Converse.

Active: They are present world wide and they are known world wide by name and symbol.

P/E: 25.2

For a previous very old report from 2013 please click on analysis of Nike.
Contrarian analysis of Nike 2017

The P/E of Nike is awful with 25.2 and the P/B is also horrible with 7.7 which gives a very clear no go from Graham!
The earnings to sales looks ok with 12% and the ROE is really good with almost 31% which is this case is not coming from debt leverage since the book to debt ratio is very good with 1.3.
The the last five year they have shown an excellent growth rate of 6.1% yearly which gives them a motivated P/E of around 20 which, however, still means that they are overvalued by the market today.
They pay a silly 1.1% dividend which only represents 27% of their earnings so there are room for further increases.

Conclusion: Nike is not a company for Graham as it looks today. The P/E and the P/B is too high and the dividend is too low. The only thing that is really good is the ROE. I will however remain as a shareholder.

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