Nike, Inc. (NYSE: NKE)
17 March 2014
Rushil Surapaneni| Saad Hirani
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AGENDA
 Business Overview
 Company Fundamentals
 Chart Analysis
 Competitors
 Competitive Analysis
 Entry strategy
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
BUSINESS OVERVIEW – SPORTS EQUIPMENT & SPORTSWEAR
Stock Overview
Business Overview
 A major publicly traded sportswear and
equipment supplier based in the United
States.
 Operates 700 stores in 46 different
countries.
Growth Analysis
 Since its establishment in 1964, Nike has
shown continuous substantial growth as
a corporation both domestically and
globally.
 With sound financial practices and
innovation strategies, it is likely Nike will
continue to grow between 10-15%
annually
 Incredible track record
 Consistently outperforms the S&P 500.
Nike has demonstrated signs of performing far above the markets and possesses a track record of consistent growth.
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
COMPANY ANALYSIS-NIKE
Business Model
 Spending money away from
traditional media and moving more
money into social media.
 For athletes, Nike zeroes in on
athletes who demonstrate a high
ROI as measured by number of
Facebook fans and Twitter followers
they have.
Factors Behind Growth
 Increasing global market share:
 Nike has been showing strong
growth in North American
market and equally impressive
in emerging markets.
 Company has forecasted
significantly improved future
orders in China, indicating its
sales will pick up once again
there.
 Decent valuation compared to
competition.
 Recently voted as world’s most
innovative company in 2013.
 Secular trend of growing fitness
consciousness and rapidly rising
income levels in emerging
economies
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
COMPANY FUNDAMENTALS
Essential Statistics




Highlights
Beta: 0.7
Market Cap: $70.36 bn
P/E: 25.35 | Earnings per share : 3.13
ROI: 25.05% | ROA: 13.66%
Revenue (Millions)
5000
20.00
4000
15.00
3000
10.00
2000
5.00
1000
0
2011
2012
0.00
2013
Operating Margin (%)
Revenue and Operating Margins
 Cash to Debt ratio of 1.19 indicates
“cash is king” is part of its growth
strategy
 In the past 12 months the stock has
gained 43.2%.
 In Q2 2014, revenues from North
America grew by 9%, while Central &
Eastern Europe and Western Europe
saw revenue growth by 14% each.
Year
Nike has seen consistent revenue growth, growth in EPS, and is not particularly volatile. .
The company possesses healthy cash flows and demonstrates interests are aligned with
shareholders.
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
CHART ANALYSIS
Source: Google Finance
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
COMPETITORS
Primary Competitors
Primary competitors include Adidas
AG, PUMA Se, and Under Armour.
 Nike reported an 11% rise in sales in
western Europe in the 1st half of fiscal
2014, while Adidas posted a fall of 6%
at constant currencies in its 3rd quarter.
Primary Flaws of
Competition
 Under Armour’s lack of
meaningful international
growth and footwear brand
being too small leads many
analysts to believe in a major
dip in Under Armour stock
price.
 Adidas losing ground to Nike
in European markets and Nike
has more strategically
diversified itself with Cole
Haan, Hurley, and Jordan.
Sources:
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Business Overview | Company Analysis | Company Fundamentals | Charts | Competitors | Summary
SUMMARY
Thesis Points
 Strong historical growth and
opportunities.
 Healthy cash flows and operations.
 Interests aligned with shareholders.
 Highly innovative and continued
expansion in domestic and
international markets.
In Conclusion
 We plan to invest in Nike as soon as
approval is given because of the
indicators of continued growth in
future earnings reports and earnings
to beat Wall Street expectations
 Earnings release: 20 March 2014
 Stronger market hold compared to
competitors.
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