Although Nike (NKE) is one of the world’s most valuable brands. Some people wonder if the shoemaker can survive.
Nike’s survival is in doubt because its brand value is falling. For example, Nike’s brand value fell from $34.792 billion in 2020 to $30.443 billion in 2021, Statista estimates. However, Nike’s brand value recovered to $33.176 billion in 2022.
However, Nike is a growing company. Stockrow estimates its revenues grew by 17.24% in the quarter ending on 30 November 2022. The revenue growth rate rose from 3.58% on 31 August 2022 and 1.01% on 30 November 2021.
Nike is a Growing Company
For example, Nike’s quarterly revenues grew from $11.357 billion on 30 November 2021 to $13.315 billion on 30 November 2022. Similarly, the quarterly gross profit grew from $5.213 billion on 30 November 2021 to $5.711 billion on 30 November 2022.
In comparison, Nike’s quarterly operating income grew from $1.454 billion on 30 November 2021 to $1.587 billion on 30 November 2022. Thus, Nike is growing and making a little more money.
However, Nike (NYSE: NKE) is generating less cash. For example, the quarterly operating cash flow fell from $2.757 billion on 30 November 2021 to $357 million on 31 August 2022. Stockrow reported no quarterly operating cash flow for Nike on 30 November 2022.
In contrast, the quarterly ending cash flow rose from $31 million on 30 November 2022 to $7.226 billion on 30 August 2022. Thus, Nike has more cash.
Can Nike Grow?
Nike (NKE) is a growing company. The total assets grew from $38.917 billion on 30 November 2021 to $41.088 billion on 30 August 2022. However, Nike’s total assets fell to $39.647 billion on 30 November 2022.
Conversely, Nike’s cash and short-term investments fell from $15.103 billion on 30 November 2021 to $10.621 billion on 30 November 2022. Yet Nike’s Total Debt fell from $9.88 billion on 30 November 2021 to $9.424 billion on 30 November 2022.
So yes, Nike can grow, but it has less cash and less debt. Nike is paying off enormous amounts of debt. It reported a quarterly financing flow of -$1.404 billion on 31 August 2022.
What Value does Nike Offer?
Nike (NKE) is one of the world’s most popular sportswear brands. For example, 61% of UK men love UK, Statista estimates.
In 2020, 8.59 million British people wore Nike shoes and clothing and 5.3 million British people bought Nike clothing, Fashion Discounts estimates. Impressively, Nike’s UK ecommerce footwear store generated £93.1 million ($112.54 million) in net sales in 2020.
Footwear generated 66% of Nike’s revenues in 2022, Statista estimates. Apparel generated 30% of Nike’s revenues and equipment generated 4% of Nike’s revenues in 2022.
Nike sold $29.143 billion worth of footwear in the 2022 fiscal year, Statista estimates. Nike apparel sales generated $13.567 billion in fiscal 2022 and Nike equipment sales generated $1.624 billion in 2022. Plus, Nike’s Global Brands division generated $104 million in revenues in 2022.
Why Nike is a Value Investment
Thus, I calculate Nike generated $44.436 billion in revenues from all sales in fiscal 2022. Hence, Nike’s brand can generate enormous amounts of cash.
Consequently, I consider Nike a value investment at the $127.94 Mr. Market paid for it on 11 January 2023. Importantly, Nike is a value investment that is cheaper. Nike’s share price fell from $150.44 on 10 January 2022.
Moreover, Nike Inc. (NKE) has scheduled eight 34₵ quarterly dividends between 31 March 2023 and 2 December 2024. Notably, the Nike quarterly dividend grew from 30.5₵ on 3 October 2022. Nike shares were offering a $1.36 forward dividend and a 1.06% forward dividend yield on 11 January 2023.
If you are seeking a cheap fashion stock with growth potential, Nike Inc. (NYSE: NKE) is worth examining. I think Nike offers enormous brand value at a reasonable price. Nike will survive and thrive.
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