Nike Price To Book vs. Return On Equity

NKE Stock  USD 77.96  0.89  1.13%   
Based on the measurements of profitability obtained from Nike's financial statements, Nike's profitability may be sliding down. It has an above-average probability of reporting lower numbers next quarter. Profitability indicators assess Nike's ability to earn profits and add value for shareholders. At present, Nike's Sales General And Administrative To Revenue is projected to increase slightly based on the last few years of reporting. The current year's Days Of Sales Outstanding is expected to grow to 61.06, whereas EV To Sales is forecasted to decline to 1.58. At present, Nike's Operating Income is projected to increase significantly based on the last few years of reporting. The current year's Income Before Tax is expected to grow to about 7 B, whereas Net Income From Continuing Ops is forecasted to decline to about 3.9 B.
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.340.4456
Way Down
Very volatile
Net Profit Margin0.06960.111
Way Down
Pretty Stable
Operating Profit Margin0.130.1303
Slightly Down
Very volatile
Pretax Profit Margin0.140.1304
Notably Up
Pretty Stable
Return On Assets0.150.1496
Slightly Up
Very volatile
Return On Equity0.410.395
Sufficiently Up
Slightly volatile
For Nike profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Nike to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Nike Inc utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Nike's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Nike Inc over time as well as its relative position and ranking within its peers.
  

Nike's Revenue Breakdown by Earning Segment

Check out Correlation Analysis.
Is Textiles, Apparel & Luxury Goods space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Nike. If investors know Nike will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Nike listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.26)
Dividend Share
1.48
Earnings Share
3.45
Revenue Per Share
33.122
Quarterly Revenue Growth
(0.10)
The market value of Nike Inc is measured differently than its book value, which is the value of Nike that is recorded on the company's balance sheet. Investors also form their own opinion of Nike's value that differs from its market value or its book value, called intrinsic value, which is Nike's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Nike's market value can be influenced by many factors that don't directly affect Nike's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Nike's value and its price as these two are different measures arrived at by different means. Investors typically determine if Nike is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Nike's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Nike Inc Return On Equity vs. Price To Book Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Nike's current stock value. Our valuation model uses many indicators to compare Nike value to that of its competitors to determine the firm's financial worth.
Nike Inc is regarded fourth in price to book category among its peers. It also is regarded fourth in return on equity category among its peers reporting about  0.05  of Return On Equity per Price To Book. The ratio of Price To Book to Return On Equity for Nike Inc is roughly  22.16 . At present, Nike's Return On Equity is projected to increase slightly based on the last few years of reporting. Comparative valuation analysis is a catch-all technique that is used if you cannot value Nike by discounting back its dividends or cash flows. It compares the stock's price multiples to nearest competition to determine if the stock is relatively undervalued or overvalued.

Nike Return On Equity vs. Price To Book

Price to Book (P/B) ratio is used to relate a company book value to its current market price. A high P/B ratio indicates that investors expect executives to generate more returns on their investments from a given set of assets. Book value is the accounting value of assets minus liabilities.

Nike

P/B

 = 

MV Per Share

BV Per Share

 = 
8.42 X
Price to Book ratio is mostly used in financial services industries where assets and liabilities are typically represented by dollars. Although low Price to Book ratio generally implies that the firm is undervalued, it is often a good indicator that the company may be in financial or managerial distress and should be investigated more carefully.
Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

Nike

Return On Equity

 = 

Net Income

Total Equity

 = 
0.38
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.

Nike Return On Equity Comparison

Nike is currently under evaluation in return on equity category among its peers.

Nike Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Nike, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Nike will eventually generate negative long term returns. The profitability progress is the general direction of Nike's change in net profit over the period of time. It can combine multiple indicators of Nike, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for Next Year
Accumulated Other Comprehensive Income53 M55.6 M
Operating Income6.7 BB
Income Before Tax6.7 BB
Total Other Income Expense Net10 M16.1 M
Net Income5.7 BB
Income Tax Expense1000 M601.1 M
Net Income Applicable To Common Shares5.8 B6.1 B
Net Income From Continuing Ops5.7 B3.9 B
Non Operating Income Net Other322 M338.1 M
Net Interest Income161 M169.1 M
Interest Income6.9 M6.6 M
Change To Netincome488.8 M513.2 M
Net Income Per Share 3.76  3.94 
Income Quality 1.30  0.94 
Net Income Per E B T 0.85  0.54 

Nike Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Nike. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Nike position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Nike's important profitability drivers and their relationship over time.

Use Nike in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Nike position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nike will appreciate offsetting losses from the drop in the long position's value.

Nike Pair Trading

Nike Inc Pair Trading Analysis

The ability to find closely correlated positions to Nike could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Nike when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Nike - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Nike Inc to buy it.
The correlation of Nike is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Nike moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Nike Inc moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Nike can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Nike position

In addition to having Nike in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run Consumer Discretionary ETFs Thematic Idea Now

Consumer Discretionary ETFs
Consumer Discretionary ETFs Theme
ETF themes focus on helping investors to gain exposure to a broad range of assets, diversify, and lower overall costs. The Consumer Discretionary ETFs theme has 29 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Consumer Discretionary ETFs Theme or any other thematic opportunities.
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When determining whether Nike Inc is a strong investment it is important to analyze Nike's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Nike's future performance. For an informed investment choice regarding Nike Stock, refer to the following important reports:
Check out Correlation Analysis.
You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
To fully project Nike's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Nike Inc at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Nike's income statement, its balance sheet, and the statement of cash flows.
Potential Nike investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Nike investors may work on each financial statement separately, they are all related. The changes in Nike's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Nike's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.