Nike Stock Is Down 62%. Is It a Buy?
Generado por agente de IATheodore Quinn
domingo, 30 de marzo de 2025, 5:47 am ET1 min de lectura
NKE--
Nike's stock has taken a significant hit, dropping 62% over the past year. The question on every investor's mind is: Is it time to buy? Let's dive into the numbers and see if NikeNKE-- is a bargain or a bust.
First, let's look at the financial health of the company. Nike has a debt-to-equity ratio of 64%, which is on the higher side but manageable given its total assets of $37.8 billion. The company also has a substantial cash reserve of $10.4 billion, providing a strong financial cushion. However, the interest coverage ratio of -36.4 is a red flag, indicating that Nike's earnings are not sufficient to cover its interest expenses. This could be a concern for investors looking for stability.
Now, let's talk about earnings. Nike's EBIT (Earnings Before Interest and Taxes) is $5.0 billion, which is a positive indicator of its operational profitability. However, the company's recent earnings reports show a mixed picture. For instance, the third quarter 2025 earnings report stated that "EPS and revenues exceed analyst expectations" (Mar 21). This is a positive sign, but it's important to note that the company's gross margin decreased to 43.6% in the second quarter, primarily due to higher discounts and changes in channel mix.
So, is Nike a buy? The answer depends on your investment strategy. If you're a value investor looking for a bargain, Nike's current stock price might be appealing. However, if you're risk-averse and prioritize stability, the company's high debt-to-equity ratio and negative interest coverage ratio might give you pause.
In conclusion, Nike's stock is down 62%, but it's not a clear-cut buy or sell. The company's financial health is a mixed bag, with strong cash reserves but a high debt-to-equity ratio and negative interest coverage ratio. Its earnings performance is also mixed, with recent reports exceeding analyst expectations but also showing a decrease in gross margin. Ultimately, the decision to buy or sell Nike stock depends on your investment strategy and risk tolerance.
Nike's stock has taken a significant hit, dropping 62% over the past year. The question on every investor's mind is: Is it time to buy? Let's dive into the numbers and see if NikeNKE-- is a bargain or a bust.
First, let's look at the financial health of the company. Nike has a debt-to-equity ratio of 64%, which is on the higher side but manageable given its total assets of $37.8 billion. The company also has a substantial cash reserve of $10.4 billion, providing a strong financial cushion. However, the interest coverage ratio of -36.4 is a red flag, indicating that Nike's earnings are not sufficient to cover its interest expenses. This could be a concern for investors looking for stability.
Now, let's talk about earnings. Nike's EBIT (Earnings Before Interest and Taxes) is $5.0 billion, which is a positive indicator of its operational profitability. However, the company's recent earnings reports show a mixed picture. For instance, the third quarter 2025 earnings report stated that "EPS and revenues exceed analyst expectations" (Mar 21). This is a positive sign, but it's important to note that the company's gross margin decreased to 43.6% in the second quarter, primarily due to higher discounts and changes in channel mix.
So, is Nike a buy? The answer depends on your investment strategy. If you're a value investor looking for a bargain, Nike's current stock price might be appealing. However, if you're risk-averse and prioritize stability, the company's high debt-to-equity ratio and negative interest coverage ratio might give you pause.
In conclusion, Nike's stock is down 62%, but it's not a clear-cut buy or sell. The company's financial health is a mixed bag, with strong cash reserves but a high debt-to-equity ratio and negative interest coverage ratio. Its earnings performance is also mixed, with recent reports exceeding analyst expectations but also showing a decrease in gross margin. Ultimately, the decision to buy or sell Nike stock depends on your investment strategy and risk tolerance.
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