An investment analysis and assessment of Nike, Inc. common stock is developed and presented in this paper. The findings of the analysis and assessment are presented as (1) a company summary, (2) management's vision, (3) the competitive environment, (4) a ratio analysis, (5) estimates of return and price in relation to the company's common stock, and (6) a summary of the findings, ending with a recommendation for investors in relation to Nike common stock. This recommendation (to save the reader the effort of flipping to the last pages of this report) is a strong buy.
Nike, Inc., headquartered in Beaverton, Oregon, designs and markets globally footwear, apparel, and accessories for athletic and leisure apparel. The overwhelming majority of the company's products are produced in low-wage, developing economies, while the overwhelming majority of the company's products are marketed in high-wage, developed economies. This combined production-marketing strategy has an enviable record of producing very strong profits. Net sales for the fiscal year ending 31 May 1998 (this analysis and assessment covers the 1996-1998 period) totaled $9.6 billion on a total asset base of $5.4 billion and a total capitalization (equity plus long-term debt) of $3.6 billion, yielding a net income of $400 million.
During the 1996-1998 period, Nike, Inc. was, financially, one of the most successful of all American corporations. The results of the critical financial analysis and assessment performed project even greater financial success by Nike, Inc. in the future.
CEO and co-founder of Nike, Phil Knight, continues to hold a 34 percent equity position in the company. Knight's vision for the company has expanded over the years to a scope well beyond athletic shoes and well beyond the athletic clothing that followed success in the shoe business. Where once Nike was a manufacturer of athletic shoes and clothing, Nike retailing outlets are now an impor...