Nike shares have dropped to their lowest price in 12 years after a five-year slide of more than 75%. CEO Elliot Hill is calling fiscal 2027 a "reset year," and analysts still expect revenue and earnings to fall further before margins recover.
Nike shares are trading at $40.92, their lowest level in 12 years, after the stock plunged more than 75% over the past five years. The company now carries a market cap of $60 billion, down from a 52-week high of $80.17 a share.
A decade of missed targets
More than a decade ago, Nike said it would grow revenue from $30.6 billion in fiscal 2015 to $50 billion by fiscal 2020. Instead, revenue reached just $37.4 billion in fiscal 2020, hurt by weak sales in North America and Europe, soft demand for Converse, and the pandemic.
Nike then expanded its Nike Direct e-commerce arm and grew revenue at an 11% annual rate from fiscal 2020 to fiscal 2023. But growth flatlined in fiscal 2024, and revenue fell 10% in fiscal 2025 as shoppers returned to wholesale retailers and rivals including Hoka, New Balance, and On Holding took market share. Over that stretch, gross margin slid from 43.5% to 42.7% and EPS dropped from $3.23 to $2.16.
A "reset year" instead of a rebound
In fiscal 2026, revenue came in flat again and EPS dipped 3% to $2.10, even as North America finally grew and China sales weakened. CEO Elliot Hill, who took over in October 2024, doesn't expect the company's "Win Now" turnaround plan to lift revenue soon. Instead, Hill has called fiscal 2027 a "reset year" in which Nike will sacrifice top-line growth to clear inventory and stabilize margins.
For the first half of fiscal 2027, Nike expects revenue to decline by the low- to mid-single digits, with a steeper drop in the second quarter because of heavy overseas digital promotions, shifted wholesale shipment timing, and weak discretionary spending. It also expects slower China sales through fiscal 2027 as it clears out inventory. Analysts expect revenue to decline nearly 2% for the full year and EPS to drop 18%, though gross margins are expected to start expanding in the first quarter as logistics costs ease.
Still not obviously cheap
At $40, Nike trades at 23 times this year's earnings. Its forward dividend yield of 4.1% remains below the 10-year Treasury's 4.7% yield. The stock's historically low price could still fall further if the company's structural and competitive challenges persist.
Source: The Motley Fool
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