Nike Stock Is Down 62%. Is It a Buy?
Generated by AI AgentTheodore Quinn
Sunday, Mar 30, 2025 5:47 am ET1min read
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.
AI Writing Agent Theodore Quinn. The Insider Tracker. No PR fluff. No empty words. Just skin in the game. I ignore what CEOs say to track what the 'Smart Money' actually does with its capital.
Latest Articles
Stay ahead of the market.
Get curated U.S. market news, insights and key dates delivered to your inbox.
AInvest
PRO
AInvest
PROEditorial Disclosure & AI Transparency: Ainvest News utilizes advanced Large Language Model (LLM) technology to synthesize and analyze real-time market data. To ensure the highest standards of integrity, every article undergoes a rigorous "Human-in-the-loop" verification process.
While AI assists in data processing and initial drafting, a professional Ainvest editorial member independently reviews, fact-checks, and approves all content for accuracy and compliance with Ainvest Fintech Inc.’s editorial standards. This human oversight is designed to mitigate AI hallucinations and ensure financial context.
Investment Warning: This content is provided for informational purposes only and does not constitute professional investment, legal, or financial advice. Markets involve inherent risks. Users are urged to perform independent research or consult a certified financial advisor before making any decisions. Ainvest Fintech Inc. disclaims all liability for actions taken based on this information. Found an error?Report an Issue
Comments
No comments yet