When Nike reports their fiscal Q2 ’26 financial results after the bell on Thursday, December 18, 2025, consensus is expecting $12.22 billion in revenue, $696 million in operating income and $0.38 in EPS, for expected year-over-year (y-o-y) growth of -1%, -50%, and -51%.
Jefferies put out a pretty bullish report this week on the company and the stock, and while this blog expects the q2 ’26 numbers to be better, the full-fiscal-year results which isn’t over until the May ’26 quarter is reported in June ’26, is likely to show 12-month revenue of +1%, full-year operating income down -15% and full-year EPS down 22% for the 12-months ended May ’26.
In other words, readers should expect “better” the next few quarters, but any dramatic turnaround is still a ways away.
In fiscal Q1 ’26, the good news was that it was the 2nd straight quarter of gains in the order book, revenue and EPS estimates were mostly unchanged after Q1 ’26 was reported, meaning that the downward revisions – at least for now – looked to have stopped, while the bad news was that the tariff impact was boosted from $1 billion to $1.5 billion and will have a 120 bp negative impact on FY ’26 gross margin.
North American EBIT (Nike still reports EBIT, and not operating income), saw it’s third consecutive quarter of sequential improvement.
China is still 13% of total Nike revenue and 40% of EBIT, thus it’s not an immaterial region for the shoe giant, but given the tariff environment, I wouldn’t expect great improvement in the regional metrics.
If Nike’s going to start outperforming, it will like be driven by North American results.
Valuation:
When Nike peaked near $180 in late 2021, the stock was trading near 5x revenue, but today, assuming the quarterly revenue estimate is met, Nike is trading at 1.7x trailing twelve-month revenue. Looking back at the historical spreadsheet, the last time Nike traded below 2x revenue was in 2014, per this blog’s numbers, so the stock is getting cheaper, but looks the old saying goes, it’s all relative.
At 40x expected fiscal EPS of $1.68, Nike is still expected to show EPS down y-o-y 22%. The other metrics look similar to the PE: Price to cash-flow and price to free-cash-flow are 29x and 35x (ex-cash) respectively.
The only reasonably-attractive metric is the dividend yield today at 2.42% and even that doesn’t look great relative to money market yields.
Morningstar’s “intrinsic value” estimate is $104, which leaves the stock trading at 35% discount to expected fair value, which is one of the reasons the stock is still held by client’s today, since – in this market – it’s hard to find individual companies trading at that big of a discount to perceived intrinsic value.
One interesting aspect to the valuation story probably not understood by most readers, is that Nike’s quality of earnings have actually improved, as cash-flow and free-cash-flow now fully cover net income, although cash-flow is down from it’s peak levels as well.
Nike had a 3% free-cash-flow yield at the end of last quarter.
Summary / conclusion: My own opinion is that Elliott Hill deserves the benefit of the doubt in terms of restoring the Nike brand and returning the footwear and apparel giant to some semblance of mid-single-digit and low double-digit revenue and EPS growth over the next few years.
The SKINS initiative with Kim Kardashian just launched at the end of the Q1 ’26 so perhaps that initiative will be updated on this call, while running, which grew 20% y-o-y last quarter, had some interesting things happening with it’s Austin, Tx., store, but these are still small relative to the Nike whole, however it shows that Elliott isn’t standing still.
The reader commentary anytime I post on Nike is usually addressing, “Nike went woke, and got broke” or something along those lines, (which isn’t completely wrong), but the abrogation of the retail footwear space allowing the likes of Hoka, Skechers, and ON to grab easy market share from Nike over the last few years, was just criminal in terms of destroying the brand.
These newer brands have the “it” factor that Nike used to have, and Elliott needs to reclaim that, and it’s not going to be easy.
In terms of portfolio construction, Nike is the kind of stock that – if AI and the dominant growth companies hit a serious rough patch – the stock is completely uncorrelated or disconnected from the large-cap growth and “major brand” class, and would likely hold it’s value in a difficult market since it’s still down more than 50% of late 2021 high. (That’s one reason it’s still being kept in client accounts.)
Former articles on Nike can be found here, here, here, and here.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. All EPS, revenue and cash-flow estimate data sourced from LSEG.