Analysis of Nike

Company: Nike
 
Business: An American company that are selling and developing athletic footwear, apparel, equipment and accessories. They have several brands: Nike, Nike Golf, Hurley, Jordan Brand and Converse. For more information about the individual brands please look here.

Active: They are present world wide and they are known world wide by name and symbol. I do however not buy their products I guess it comes from their Air products that broke far to fast when I was a teenager and that has left its mark even until today.

P/E: 23.4

 This company was analysed due to a request that can be found here.

The P/E for Nike is too high for my taste with 23.4 and the P/B is even worse with 5.2 which according to Graham gives a very clear signal of an currently uninteresting company to invest in. The earnings to sales are also not something to hang over the open fire place or maybe it is because one could wish it to be much better since it is currently only 10%... The ROE I must admit is however very good with 22% and the book to debt is also good (like almost all American companies today) with a ratio of 1.7. The first thing Nike say about themselves is that they are a growth company. Hmmm... For me a growth company should have at least 10%. Nike have for the last five years had a yearly growth of 5.7% which is good but not acceptable for a growth company. The motivated P/E ends up around 19 to 20 which means that today the stock is fair to slightly overvalued on the market. They pay a tiny dividend of 1.25% which represents 29% of their earnings so they will be able to keep it up.

 

Conclusion: A healthy American company with a well known brand that can be bought today at a fair price but for me it is still too high. I want to get these companies even cheaper so for me it is a no go.

 

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