Nike Inc. (NYSE:NKE)

The analysis of the financial data reveals several key trends and insights over the six-year period from May 31, 2019, to May 31, 2024.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a noticeable decline from 4,182 million US dollars in 2019 to 2,477 million in 2020, likely influenced by external economic conditions. Following this downturn, a strong recovery is evident, with NOPAT increasing significantly to 5,490 million in 2021 and maintaining relatively stable levels through to 2024, with slight fluctuations around the 5,000 million mark.

Cost of Capital

The cost of capital showed a gradual decline over the period, decreasing from 14.51% in 2019 to 13.95% in 2024. This steady reduction may indicate an improvement in the company’s risk profile or changes in market conditions that have lowered the company’s required rate of return.

Invested Capital

Invested capital increased significantly from 14,182 million US dollars in 2019 to 21,129 million in 2022, suggesting ongoing investments or expansions. A slight decrease was observed in 2023, followed by a rebound to 22,129 million in 2024. This growth in capital base implies active deployment of financial resources, potentially supporting future growth initiatives.

Economic Profit

Economic profit displays a volatile trend. It started positively at 2,124 million in 2019 but turned negative in 2020, with a loss of 198 million, reflecting challenges within that year. From 2021 onwards, economic profit returned to positive territory and showed strong performance through 2022 and 2023 but exhibited a slight decline in 2024. Despite this decline, economic profit remained above 2,000 million, indicating consistent value creation above the cost of capital in recent years.

Overall, the data suggests that after a challenging year in 2020, there was a strong operational recovery accompanied by stable profitability. The gradual decrease in the cost of capital and the increase in invested capital indicate favorable financial conditions and potential strategic investments. Economic profit trends confirm that the company has generally succeeded in generating returns above its capital costs, supporting sustained value creation over the period examined.

The financial data reveals several notable trends in profitability over the reported periods.

Net Income

The net income experienced a significant decline from 2019 to 2020, dropping from 4,029 million USD to 2,539 million USD. This reduction aligns with the global economic downturn during this period. However, there was a strong recovery in 2021, with net income more than doubling to 5,727 million USD. The subsequent two years saw fluctuations, with a decrease to 5,070 million USD in 2023, followed by an increase to 5,700 million USD in 2024, indicating a degree of volatility but overall recovery compared to the early years.

Net Operating Profit After Taxes (NOPAT)

The NOPAT data mirrors the net income trend closely, starting at 4,182 million USD in 2019 and declining substantially in 2020 to 2,477 million USD. A pronounced rebound occurred in 2021, rising to 5,490 million USD, followed by a slight increase to 5,557 million USD in 2022. In 2023, there was a dip to 5,013 million USD, but a moderate recovery was observed in 2024, reaching 5,146 million USD. This trajectory suggests the company managed to stabilize and improve its operational efficiency after the initial downturn.

Overall, both net income and NOPAT demonstrate resilience after the sharp decline in 2020. The data indicates recovery and stabilization in the subsequent years, though with some variability. The slight declines noted in 2023 for both metrics suggest external or operational challenges during that period, but the partial recovery in 2024 points to ongoing efforts to sustain profitability.

Income Tax Expense

The income tax expense displayed considerable fluctuations over the observed periods. Initially, it declined from 772 million US dollars in May 2019 to 348 million in May 2020, indicating a significant reduction in tax liability or taxable income during this timeframe. This was followed by a sharp increase in May 2021 to 934 million US dollars. After a moderate decrease to 605 million in May 2022, the expense rose again substantially, reaching 1,131 million US dollars in May 2023 before declining slightly to 1,000 million in May 2024. Overall, the trend reflects volatility with an upward bias particularly in the last three recorded years.

Cash Operating Taxes

Cash operating taxes show a consistent upward trend across the years. Starting from 770 million US dollars in May 2019, there was a moderate increase to 764 million in May 2020, which was followed by a significant surge to 1,390 million in May 2021. This upward momentum continued, albeit at a slower pace, rising to 1,313 million in May 2022 and 1,264 million in May 2023. The latest data point from May 2024 indicates a further increase to 1,482 million US dollars. The steady growth indicates rising cash tax payments associated with operations, possibly reflecting improved profitability or changes in tax payment timings.

Comparative Insights

While both income tax expense and cash operating taxes exhibit notable changes, cash operating taxes follow a more consistent and upward pattern. Income tax expense is more volatile, with periods of both sharp decreases and increases, which may reflect accounting adjustments, tax planning strategies, or variable taxable income. The divergence between the relatively smoother increase in cash operating taxes and the fluctuating income tax expense suggests a timing or recognition difference between tax expenses recognized in accounting records and actual tax payments.

The financial data presents several key trends regarding the company's debt, equity, and invested capital over a six-year period from May 2019 to May 2024.

Total Reported Debt & Leases

The total reported debt and leases show a significant increase from 2019 to 2020, nearly doubling from approximately $6.7 billion to $13 billion. After this sharp rise, the debt level slightly decreased but remained relatively stable in the following years, gradually declining to about $11.95 billion by May 2024. This pattern suggests an initial period of increased leverage followed by a gradual deleveraging or stabilization phase.

Shareholders’ Equity

Shareholders' equity experienced a declining trend from May 2019 through May 2020, decreasing from $9 billion to $8 billion. Subsequently, there was a marked recovery starting in 2021, with equity rising significantly to nearly $12.8 billion. This upward trajectory continued through 2022, reaching a peak of approximately $15.3 billion, before slightly declining to $14 billion in 2023 and then marginally increasing again to $14.4 billion by 2024. The overall pattern indicates a strong equity growth phase following an initial downturn, reflecting improved retained earnings or capital injections.

Invested Capital

Invested capital saw a substantial increase between 2019 and 2020, growing from roughly $14.2 billion to over $19 billion. The upward trend persisted, albeit with slower growth, reaching just above $21 billion in 2021 and stabilizing near this level through 2022. A slight dip occurred in 2023, followed by a recovery to approximately $22.1 billion in 2024. This suggests continued investment in the company's assets or operations, tempered by some variation in the most recent period.

In summary, the data reflects a period of heightened financial activity around 2020, with increased leverage and invested capital. Subsequent years show signs of financial stabilization and growth in shareholders' equity, indicating a strengthening of the company's financial position. The gradual reduction of debt alongside rising equity and stable invested capital suggests improved balance sheet management and potentially enhanced financial resilience.

Over the observed six-year period, several key financial metrics demonstrate variability that reflects changes in overall economic performance and capital deployment.

Economic Profit

The economic profit experienced notable fluctuations. It started at a positive value of 2,124 million USD in 2019, dramatically dipped to a negative 198 million USD in 2020, and then rebounded strongly in 2021 to 2,452 million USD. Following this recovery, economic profit remained relatively stable but slightly decreased from 2,540 million USD in 2022 down to 2,058 million USD in 2024. This pattern suggests a recovery phase after a setback in 2020, with profitability stabilizing but facing some pressure in recent years.

Invested Capital

Invested capital consistently increased throughout the years, rising from 14,182 million USD in 2019 to a peak of 22,129 million USD in 2024. The growth was steady, with particularly strong increments seen between 2019 and 2021. Such increases in invested capital indicate ongoing expansions or reinvestments in the business, possibly linked to growth initiatives or asset accumulation.

Economic Spread Ratio

The economic spread ratio, which measures the efficiency of capital usage, showed considerable volatility. It was high at 14.98% in 2019 but turned negative at -1.04% in 2020, reflecting the negative economic profit that year. Subsequently, the ratio rebounded strongly to 11.67% in 2021 and held above 9% through 2024, though it showed a gradual decline from 12.02% in 2022 to 9.3% in 2024. Although the company maintained positive returns on invested capital after 2020, the downward trend suggests decreasing capital efficiency or increased cost of capital over the last few years.

Overall, the data reveals that the company faced a significant challenge in 2020 impacting profitability and returns, likely related to external economic factors. However, recovery was strong in the subsequent years, with increasing capital investment and stabilized economic profit. The declining economic spread ratio in recent periods indicates a need for enhanced capital efficiency or cost management to sustain profitability growth going forward.

The financial data reveals several notable trends over the six-year period ending May 31, 2024. Revenues have shown consistent growth overall, increasing from $39,117 million in 2019 to $51,362 million in 2024. This upward trajectory is interrupted only slightly in 2020, where revenues declined to $37,403 million, potentially reflecting economic challenges during that year. However, revenues rebounded strongly in subsequent years, crossing $50 billion by 2023 and maintaining a similar level in 2024.

Economic profit exhibits greater variability during the period. It starts at $2,124 million in 2019 but drops into negative territory in 2020, with a loss of $198 million, suggesting a significant dip in profitability or operational inefficiencies during that year. From 2021 onwards, economic profit recovers strongly, peaking at $2,540 million in 2022. This profit stabilizes and slightly declines to $2,058 million by 2024, yet remains solidly positive, indicating successful management of economic value creation despite recent years' variability.

The economic profit margin mirrors these patterns closely. It was a healthy 5.43% in 2019 before falling to -0.53% in 2020, reinforcing the indication of a challenging year with economic profit loss. The margin returns to positive territory in 2021 and remains above 4% through 2024, though the trend from 2022 onward shows a gradual decline from 5.44% to 4.01%. This suggests that while economic profitability remains intact, margin pressures have emerged, possibly due to rising costs or changing market conditions.

Revenues

Demonstrate strong growth overall with a brief dip in 2020, reflecting resilience and expansion post-2020.

Economic Profit

Highly variable with a notable loss in 2020, followed by recovery and stabilization at a positive level above $2 billion from 2021 onwards.

Economic Profit Margin

Declines sharply in 2020 to a negative margin but recovers to a range of approximately 4% to 5.5%, with a slight downward trend from 2022 to 2024.

In summary, the company demonstrated strong revenue growth despite economic headwinds in 2020. Economic profit and its margin were negatively impacted during that challenging year but recovered in subsequent periods. Although profitability margins remain healthy, recent years show some pressure on economic profit margins, indicating potential areas for efficiency improvements or cost management focus.