An independent two-stage DCF analysis by a frontier AI model.
Nike is currently navigating a difficult operational phase, marked by sluggish revenue growth and the need to revitalize its product lineup. Despite these near-term headwinds, the company remains a formidable cash generator, producing $2.57B in free cash flow.
At current price levels, the market has heavily discounted Nike's historical premium valuation, effectively pricing the stock as a 'show-me' story. The valuation model suggests the stock is currently trading near its fair intrinsic value, offering a modest margin of safety while the company executes its turnaround strategy.
A 5% growth rate assumes a successful but gradual turnaround. It projects that Nike will stabilize its top-line revenue and improve margins through cost-cutting, but acknowledges that returning to historical double-digit growth will be challenging in the near term.
A 9.0% discount rate reflects a slightly elevated risk profile (Beta 1.286) due to the ongoing operational reset and macroeconomic uncertainties impacting global consumer discretionary spending.
A 3.0% terminal growth rate assumes Nike maintains its position as the preeminent global athletic brand, growing roughly in line with global GDP over the long term.
Intrinsic value per share under varying discount rate and terminal growth rate assumptions.
| WACC ↓ / Terminal → | 2.0% | 2.5% | 3.0% | 3.5% | 4.0% |
|---|---|---|---|---|---|
| 2.0% | $66.58 | $55.48 | $47.55 | $41.61 | $36.99 |
| 2.5% | $73.97 | $60.52 | $51.21 | $44.38 | $39.16 |
| 3.0% | $83.22 | $66.58 | $55.48 | $47.55 | $41.61 |
| 3.5% | $95.11 | $73.97 | $60.52 | $51.21 | $44.38 |
| 4.0% | $110.96 | $83.22 | $66.58 | $55.48 | $47.55 |
■ Undervalued vs current price ■ Overvalued vs current price
The 5% rate balances Nike's historically strong execution capabilities against its current struggles with product innovation and intense competition, modeling a moderate recovery rather than an immediate return to hyper-growth.
A 9.0% discount rate was used, which is higher than for historically stable peers, reflecting the increased execution risk inherent in a turnaround phase and its higher beta.
No. This analysis is a demonstration of AI reasoning based on a specific set of inputs and rigid formulas. It is not financial advice.
Disclaimer: The numbers presented on this page are for educational and entertainment purposes only. They are the result of a deterministic mathematical model fed with assumptions generated by an Artificial Intelligence (Gemini 3.1). This does not constitute investment advice. Always conduct your own due diligence before investing in the stock market.