In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Nike (NYSE:NKE) in relation to its major competitors in the Textiles, Apparel & Luxury Goods industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.

Nike Background

Nike is the largest athletic footwear and apparel brand in the world. Footwear generates about two-thirds of its sales. Key performance footwear categories include basketball, running, and football (soccer). Its brands include Nike, Jordan (premium athletic footwear and clothing), NikeSkims (women's athleisure), and Converse (casual footwear). Nike sells products worldwide through company-owned stores, franchised stores (including about 5,500 in China), and third-party retailers. The firm also operates e-commerce platforms in more than 40 countries. Nearly all its production is outsourced to contract manufacturers in more than 30 countries. Nike was founded in 1964 and is based in Beaverton, Oregon.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Nike Inc 29.36 4.69 1.42 3.69% $0.77 $4.53 0.09%
Deckers Outdoor Corp 14.33 5.49 2.79 18.96% $0.65 $1.17 7.14%
On Holding AG 45.60 5.64 5.99 4.35% $0.1 $0.48 22.62%
Birkenstock Holding PLC 15.35 2.07 2.71 1.84% $0.11 $0.22 11.11%
Steven Madden Ltd 54.08 2.87 0.96 2.7% $0.04 $0.32 29.43%
Wolverine World Wide Inc 14.37 3.29 0.71 7.9% $0.05 $0.24 4.61%
Rocky Brands Inc 13.06 1.16 0.60 2.61% $0.01 $0.06 9.11%
Average 26.13 3.42 2.29 6.39% $0.16 $0.41 14.0%

By carefully studying Nike, we can deduce the following trends:

  • At 29.36, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.12x, suggesting a premium valuation relative to industry peers.

  • The elevated Price to Book ratio of 4.69 relative to the industry average by 1.37x suggests company might be overvalued based on its book value.

  • With a relatively low Price to Sales ratio of 1.42, which is 0.62x the industry average, the stock might be considered undervalued based on sales performance.

  • The Return on Equity (ROE) of 3.69% is 2.7% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.

  • The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $770 Million is 4.81x above the industry average, highlighting stronger profitability and robust cash flow generation.

  • Compared to its industry, the company has higher gross profit of $4.53 Billion, which indicates 11.05x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 0.09% is significantly lower compared to the industry average of 14.0%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When examining Nike in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

  • When evaluating the debt-to-equity ratio, Nike is in the middle position among its top 4 peers.

  • The company maintains a moderate level of debt relative to its equity with a debt-to-equity ratio of 0.79, suggesting a relatively balanced financial structure.

Key Takeaways

For Nike, the PE ratio is high compared to peers, indicating potentially overvalued stock. The PB ratio is also high, suggesting investors are paying a premium for each dollar of assets. However, the PS ratio is low, implying a potential undervaluation based on revenue. In terms of ROE, Nike shows lower profitability compared to peers. EBITDA and gross profit margins are high, reflecting strong operational performance. The revenue growth rate for Nike is lower than industry peers, indicating slower expansion in sales.

This article was generated by Benzinga's automated content engine and reviewed by an editor.