About NIKE INC
NIKE, Inc. was incorporated in 1967 under the laws of the State of Oregon.
NIKE designs, develops, markets and sells athletic footwear, apparel, equipment, accessories and services worldwide. Nike INC
are the largest seller of athletic footwear and apparel in the world. We sell our products through NIKE Direct operations, which are comprised of both NIKE-owned retail stores and sales through digital platforms (also referred to as "NIKE Brand Digital") and to wholesale accounts, which include a mix of independent distributors, licensees and sales representatives in nearly all countries around the world. NIKE INC s goal is to deliver value to its shareholders by building a profitable global portfolio of branded footwear, apparel, equipment and accessories businesses.
FCFE Details of NIKE INC shown below, US$ in millions, except per share data, based on values on 08/10/2024
|
Year |
Value |
FCFE or Terminal Value |
Present Value at 14.17% |
|
0 |
FCFE0 |
6,700 |
|
|
1 |
FCFE1 |
8,358 = 6,799 x (1+24.75%) |
6,700 |
|
2 |
FCFE2 |
100,81 = 8,484 x (1+ 20.62%) |
6,929 |
|
3 |
FCFE3 |
12,201 = 10,475 x (1+ 16.48%) |
7,721 |
|
4 |
FCFE4 |
13862 = 12,339 x (1+12.35%) |
8,701 |
|
5 |
FCFE5 |
15,914= 14,013 x (1+8.22%) |
10,722 |
|
5 |
Terminal Value (TV5) |
242,470 = 14,013 x (1+8.22%) / (14.17% - 8.22%) |
242,470 |
|
Intrinsic value of Nike INC |
$242,470 |
|
Market cap of NIKE INC. |
$218,445 |
|
Intrinsic value of NIKE INC. common stock (per share) |
$160.78 |
|
Current share price on 08/10/2024 |
$80.83 |
Analysis : Intrinsic value of NIKE INC. common stock (per share) is twice of current share price
Required rate of Return
Assumptions
|
Rate of return on LT Treasury Composite(Rf) |
4.36% |
|
Expected rate of return on market portfolio(E(RM) |
13.81% |
|
Systematic risk of Intuit Inc. Common stock (β) |
1.04 |
|
Required rate of return on Intuit Inc. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.36% +1.04[13.81% - 4.36%] |
14.17% |
FCFE Growth rate (G) Forecast
NIKE INC. H-Model
|
Year |
Value |
g |
|
1 |
g1 (PRAT Model) |
24.75% |
|
2 |
g2 (Linear Interpolation) |
20.62% |
|
3 |
g3 (Linear Interpolation) |
16.48% |
|
4 |
g4 (Linear Interpolation) |
12.35% |
|
5 |
g5 (Single stage model) |
8.22% |
2024 Calculations
Retention rate = (Net income Dividends on common stock) Net income
= (5700 - 2203) / 5700
= 61.35%
Profit margin = 100 X Net income / Revenue
= 100 X 5,700 / 51,362
= 11.09%
Asset turnover = Revenue / Total assets
= 51,362 / 38,110
= 1.34
Financial leverage = Total Assets / Stockholders equity
= 38,110 / 14,430
= 2.64
g = Retention rate Profit margin Asset turnover Financial leverage
= 61.35 X 11.09% X 1.34 X 2.64
= 24.06%
Nike Inc returned $6.4 billion to company s shareholders in fiscal 2024 through share repurchases and dividends.
Return on Invested Capital ("ROIC") was 34.9% as of May 31, 2024, compared to 31.5% as of May 31, 2023. ROIC is
considered a non-GAAP financial measure, see "Use of Non-GAAP Financial Measures" for additional information.
Nike Inc. Analysis on revenue
NIKE, Inc. Revenues for fiscal 2024 were $51.4 billion compared to $51.2 billion for fiscal 2023
Gross margin increased 110 basis points to 44.6%, primarily due to strategic pricing actions and lower ocean freight rates
and logistics costs, partially offset by higher product input costs, lower margin in NIKE Direct and unfavourable changes in net
foreign currency exchange rates.
Footwear revenue is $35,227 million of total revenue(69% of total revenue) Apparel revenue is $13,868 Million(27% of total revenue).Equipment revenue is $2,112 million(4% of total revenue) and other revenue is $155 Million.
Sources :Form 10K of NIKE INC for the fiscal year ended May 31,2024, , https://www.stock-analysis-on.net, https://about.nike.com/en/company, https://investors.nike.com/investors/news-events-and-reports/?toggle=reports
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