Investment Analysis of Nike, Inc.

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

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largest contributors to Nike's annual sales. Thus, Nike's largest competitor is Adidas-Salomon, with annual sales approximating 68 percent of Nike annual sales (Nike is the global industry leader). Fila (annual sales approximating 42 percent of Nike sales) and Reebok International (with annual sales approximating 37 percent of Nike sales) also are major competitors of Nike, Inc. Ratio Analysis An extensive ratio analysis of Nike, Inc. was performed. These ratios are presented first as a group. Following the presentation of the ratios, the company is assessed within the context of the ratios. Presentation of the Ratios The ratios are grouped according to type, i.e., liquidity, activity, leverage, profitability, and market. The ratios are presented for the 1996-1998 period and reflect financial data as of the close of the company's fiscal year on 31 May. The ratios are presented in Table 1, which may be found on the following page. A cross-sectional and time series evaluation of Nike's performance in relation to the ratios is presented in Table 2, which may be found on page 6. Assessment of Nike's Performance in Relation to the Ratios Nike's performance generally was superior to that of the industry as a whole in relati
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Approximate Word count = 1238
Approximate Pages = 5 (250 words per page)

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