The share price of Nike, the sportswear giant best known for its trainers, has fallen nearly 40% this year and the Eugene, Oregon-based company now trades at a p/e ratio of x28.76. Nike’s quality as a company and continued growth prospects mean it has been a popular stock with many analysts for some time now. And while the company will not be immune to the cost pressures and consumer belt tightening expected over coming months, it looks in a stronger position to maintain margins than most.
Most bets are off when it comes to the direction a given stock will take over the second half of this year. Even the strongest companies are being caught up in the broad market sell-off that has been rolling out since the beginning of the year. But for investors with a longer-term horizon, that shouldn’t put you off. And Nike should be one stock that sees its value bounce back strongly when market sentiment improves.
Let’s take a look at what Nike has going for it, and potential risks that could potentially derail a valuation recovery investors should be aware of.
