Nike Inc Company

Nike Inc. Overview

Nike Inc. was founded on September 8, 1969, and is located in Beaverton, Oregon, USA. It creates, develops, markets, and sells athletic footwear, equipment, apparel, accessories, and services. Jordan, Converse, Nike Brand, and Hurley are among the company’s portfolio brands. Retail outlets, retail stores, regional distributors, and internet marketing are all part of the company’s wide supply chain system. Independent contractors create its items due to its huge size and consumer demands. By May 31st, 2016, the Nike Brand designed nine products for running, Nike basketball, Men and women’s training gears, action sports, sportswear as well as golf. The company also offers products designed for children. Most importantly, Nike is a successful company that has revolutionized the sportswear industry through customized products that meet the interest of athletes and non-athletes in various circumstances. Nike is a company of interest as it has become a household brand in the international market (Nike).

Competition and Market Volatility

Design and the integration of technology in designing its products with minimum costs and maximum utility is the drive behind its success in the industry. However, despite being a market leader in the sportswear and apparel industry, Nike faces stiff competition from other brands like Under Armour, Adidas, Li Ning, Lulu lemon Athletica, Puma and V.F. Corporation. The company also trades in both the NYSE and NASDAQ. I have chosen the company due its international market operation that provides a critical insight into the policy that it adopt to reduce stock volatility while maintaining stable market operations (Nike).

Investment in Nike Stock

Nike is the largest sportswear and apparel industry in the world with a market share of the footwear industry approximated at 62% by 2016. This makes Nike a favorite company for stock investment. The company is performing well in NYSE due to its market stability. However, the smaller and rapidly growing competitor Under Armour (AU) is shrinking the market size due to its highly designed and technologically driven performance enhancing apparel that rivals Nike products. The question of the return on investment in Nike stock is becoming a concern.

Net Income and Stock Performance

Nike gained a net income margin of 11.5% compared to its North American Market Competitor AU that realized 4.5%. Coupled with large-scale operation, Nike still has a competitive edge over its competitors, and a decision to invest in its stocks is still promising (NYSE). On the other, I disabuse the fact that Nike is responsible for technology competition in the industry. The digital age requires sound and innovative plans to remain relevant in the industry.

Stock Performance and Opportunities

Nike currently sells shares at $62 under the ticker NKE that is three times higher than Under Armour selling under the stickers AU and AAU (NYSE). The good financial performance is driving the growth of shares from $15 in 2007 to $62 by the end of this year. It is trading fairly on the stock exchange, therefore, recommended for investors who want an immediate return on their investment. The Nike shares are indicating a consistent annual increment of 20% on average. It is the second-best performing stock based on Dow Jones Industrial Average (DJI).

Is Investment in Stock Appropriate?

Investment in stock is both advantageous and risky as well. Some of the advantages of investing in stock include growing economy versus revenue. The growing economy creates more income for companies thereby increasing returns on investment. Stocks have higher return rates on average compared to inflation rates. Besides, the stock market makes it convenient to buy company share. Investors can buy stock when the values are low and sell when the value rises (“Top 5 Reasons You Should not Own Stocks”). Despite investing in stock, the investor still has control of the money and can decide to sell the shares to get immediate cash. Contrastingly, the stock market is highly speculative that can lead to panic, sale of shares, and losses. As such, investors can avoid losses by investing in bonds. In case the company is undergoing liquidation due to sustained losses in the stock market, the stockholders are paid last increasing the risk of losing funds (“Top 5 Reasons You Shouldn’t Own Stocks”). Additionally, investment in stock requires a lot of time and monitoring to buy when the share prices are low and sell when the prices rise.

Industry Analysis

Nike is the biggest sportswear and apparel industry with annual earnings of $34.26 billion in the year ended 2016 (Mau). From the earnings from the three quarters in 2017 in comparison to last year, there is an improvement in performance, and it is projected that Nike might get net earnings of more than $40 billion. The closest rivals in the apparel industry regarding revenues include H&M ($19 Billion), Zara ($14.4 Billion), Louis Vuitton ($13 Billion), and Adidas ($10 Billion) among others (Mau). Nike has a high and increasing number of employees as indicated in the graph below.

Number of Nike’s Employees

Figure 1: Number of Nike’s employees worldwide from 2009 to 2017(https:\/\/www.statista.com\/statistics\/243199\/number-of-employees-of-nike-worldwide\/)

The high billion dollar revenues indicate high profitability and earnings per share. By today November 30th, 2017, the share price is at $60.36 after 12 months ended August 31st, 2017. The price to earnings ratio as at November 30th, 2017 is 25.69. The ratio indicates that the company is doing well with increasing revenue and returns on shares of $0.58 (“Dividend History For Nike Inc. (NKE)”). The last three years’ growth rate indicates a 40.40% implying an annual increase in revenue by 12.80 per year while earnings per share increased by 5.90% per share. Nike pays dividends at 1.3% per share value (“Dividend History For Nike Inc. (NKE)”). As at November 30th, 2017, share price is averaging $60.36. Calculating 1.3% of the share value gives $0.80 dividends earned quarterly (“Nike PE Ratio (NKE)”). The earnings per share have been increasing. Nike is a profitable company with significant market size. Therefore, I recommend that potential investors should venture into Nike stock due to its stability in growth and increasing earnings per share.

Works Cited

“Dividend History For Nike Inc. (NKE).” StreetInsider.com. N.p., 2017. Web. 30 Nov. 2017.

“Nike PE Ratio (NKE).” Gurufocus.com. N.p., 2017. Web. 30 Nov. 2017.

“Nike.” Nike.com. N.p., 2017. Web. 30 Nov. 2017.

“Nike: Employees Worldwide 2017 | Statista.” Statista. N.p., 2017. Web. 30 Nov. 2017.

“NYSE.” Nyse.com. N.p., 2017. Web. 30 Nov. 2017.

“Top 5 Reasons You Shouldn’t Own Stocks.” The Balance. N.p., 2017. Web. 30 Nov. 2017.

Mau, Dhani. “Nike, H&M Named World’s Most Valuable Apparel Brands.” Fashionista. N.p., 2017. Web. 30 Nov. 2017.