Nike Inc. (NYSE:NKE)

The financial data presents several important trends related to profitability, invested capital, cost of capital, and economic profit over the six-year period.

Net Operating Profit After Taxes (NOPAT)

NOPAT experienced a significant increase from 2477 million USD in 2020 to a peak of 5557 million USD in 2022. This peak was followed by a decline, dropping to 2913 million USD by 2025, indicating a weakening in operating profitability in the latter years compared to the high levels achieved in 2021 and 2022.

Cost of Capital

The cost of capital shows a modest upward trend over the period, starting at 14.35% in 2020 and rising to 15.45% in 2025, with some minor fluctuations. This gradual increase suggests slightly higher capital costs or risk perceptions over time, which could impact investment and valuation decisions.

Invested Capital

Invested capital increased from 19083 million USD in 2020 to a maximum of 22129 million USD in 2024, indicating expansion or increased asset base. However, it decreased to 19883 million USD in 2025, which could imply asset disposals, efficiencies, or restructuring efforts in that final year.

Economic Profit

Economic profit was negative in 2020 at -261 million USD, then improved substantially to positive values above 1980 million USD from 2021 through 2024, illustrating value creation during these years. However, economic profit turned negative again in 2025 at -159 million USD, reflecting an erosion in value creation possibly driven by the combination of lower NOPAT and higher cost of capital.

Overall, the data reveals a pattern of strong profitability and value creation in the mid-period (2021-2024) with both NOPAT and economic profit reaching their highest points. The subsequent decline in 2025 across these key metrics, alongside rising capital costs and reduced invested capital, suggests emerging challenges impacting the company's operating performance and economic value generation in the most recent year.

Net Income

Net income shows a significant increase from 2,539 million USD in 2020 to a peak of 6,046 million USD in 2022. However, this is followed by a decline to 5,070 million USD in 2023. There is a partial recovery to 5,700 million USD in 2024 before a sharp decrease to 3,219 million USD in 2025. Overall, net income demonstrates strong growth until 2022, but subsequent years indicate volatility and a downward trend by the final year.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits a similar pattern to net income, increasing from 2,477 million USD in 2020 to 5,557 million USD in 2022. After peaking, it declines to 5,013 million USD in 2023 and slightly improves to 5,146 million USD in 2024. However, in 2025, NOPAT decreases substantially to 2,913 million USD. This trend aligns closely with net income, illustrating parallel fluctuations in profitability after operating costs and taxes.

Overall Trends and Insights

Both net income and NOPAT show a growth phase peaking around 2022, followed by a period of decline and instability. The decrease in values in 2025 suggests challenges impacting profitability, potentially due to operational or market conditions. The close alignment between net income and NOPAT indicates consistent operational efficiency relative to income generation before the decline starts.

Income Tax Expense

The income tax expense shows a fluctuating trend over the six-year period. It increased significantly from 348 million US dollars in 2020 to 934 million US dollars in 2021, followed by a decline to 605 million in 2022. However, it spiked again to 1,131 million in 2023 before gradually decreasing over the next two years, reaching 666 million in 2025. This pattern indicates volatility in the company's tax obligations, potentially influenced by changes in profitability or tax regulations.

Cash Operating Taxes

Cash operating taxes have generally trended upward from 764 million US dollars in 2020 to peak at 1,482 million in 2024. Notably, there was rapid growth between 2020 and 2021, and a stabilization phase followed with values remaining above 1,200 million until 2024. A decline is observed in 2025, dropping to 951 million. This suggests variations in operational cash tax payments, potentially reflecting changes in taxable income, tax planning strategies, or cash management.

Comparative Insight

Comparing income tax expense with cash operating taxes reveals some divergence in trends. While income tax expense is more volatile with pronounced peaks and troughs, cash operating taxes show a more gradual rise and fall. This might indicate differing timing or recognition of tax liabilities versus actual cash outflows related to taxes over the years.

Total reported debt & leases

The total reported debt and leases demonstrate a consistent downward trend over the observed period. Starting at 13,015 million US dollars at the end of May 2020, the figure gradually decreases each year, reaching 11,018 million US dollars by May 2025. This reduction suggests a strategic effort toward lowering financial leverage or refinancing liabilities on possibly more favorable terms.

Shareholders’ equity

Shareholders' equity exhibits considerable growth from May 2020 through May 2022, increasing from 8,055 million to a peak of 15,281 million US dollars. However, post-2022, equity experiences a slight decline, settling at 13,213 million by May 2025. The initial increase may indicate retained earnings accumulation or capital infusions, while the subsequent decrease might reflect distributions such as dividends, share repurchases, or changes in retained earnings.

Invested capital

Invested capital shows a fluctuation pattern throughout the period observed. Starting at 19,083 million in May 2020, it rises to a high of 22,129 million by May 2024 before decreasing to 19,883 million in May 2025. This variability could be due to changes in operational asset base, capital expenditures, or working capital adjustments, indicating shifts in investment strategies or business cycles.

Economic Profit Trends

The economic profit showed significant variability over the reported years. It began with a negative value of -261 million USD in 2020, followed by a strong positive recovery to 2,380 million USD in 2021. The upward trend continued slightly into 2022 with 2,468 million USD. However, a decline was observed in subsequent years, with economic profit decreasing to 2,028 million USD in 2023 and further down to 1,985 million USD in 2024. By 2025, economic profit turned negative again, reaching -159 million USD, indicating potential challenges in profitability or increased costs relative to capital invested.

Invested Capital Development

Invested capital generally increased over most of the period, starting at 19,083 million USD in 2020 and peaking at 22,129 million USD in 2024. There was a slight decrease in 2023 to 20,394 million USD, and again a notable decrease down to 19,883 million USD by 2025. This pattern suggests fluctuations in the company’s asset base or investment intensity, with a tendency towards moderate growth in invested capital until 2024, followed by contraction in 2025.

Economic Spread Ratio Evaluation

The economic spread ratio, which measures the return spread over the cost of capital, exhibited a marked improvement from a negative -1.37% in 2020 to a strong positive of 11.32% in 2021. It remained relatively stable and high through 2022 at 11.68%, before declining to 9.94% in 2023 and 8.97% in 2024. The ratio sharply deteriorated to -0.8% in 2025, indicating that the returns on invested capital fell below the cost of capital during that year, affirming the negative economic profit figure observed.

Overall Insights

The data reflects a period of recovery and growth following 2020, with improvements in profitability and efficient use of capital through 2022. However, starting from 2023, there is a clear downward trend in economic profit and economic spread, culminating in negative returns by 2025 despite relatively stable levels of invested capital. These trends may suggest increasing operational challenges, rising costs, or diminishing returns on investments that warrant further investigation to identify underlying causes and inform strategic decision-making.

Revenues

Revenues have shown a generally increasing trend from May 31, 2020, to May 31, 2024. Specifically, revenues rose steadily from 37,403 million US dollars in 2020 to a peak of 51,362 million US dollars in 2024. However, a noticeable decline occurred in 2025, with revenues falling to 46,309 million US dollars, representing a reduction after several years of growth.

Economic Profit

The economic profit exhibited significant volatility over the period. Initially, in 2020, the company incurred a negative economic profit of -261 million US dollars, indicating losses or underperformance relative to capital costs. In 2021 and 2022, this metric improved dramatically to positive values of 2,380 million and 2,468 million US dollars respectively, reflecting strong profitability. From 2023 to 2024, economic profit remained positive but declined to 2,028 and 1,985 million US dollars, suggesting diminishing economic returns. By 2025, economic profit turned negative again, registering -159 million US dollars, signaling a return to economic losses.

Economic Profit Margin

The economic profit margin mirrored the trajectory of economic profit, starting with a negative margin of -0.7% in 2020. It sharply increased to over 5% in 2021 and 2022 (5.34% and 5.28%), indicating a period of strong profitability relative to revenues. However, the margin declined in 2023 and 2024, dropping to below 4% (3.96% and 3.86%), which points to weakening profit efficiency. In 2025, the margin turned negative again, at -0.34%, consistent with the downturn observed in economic profit and revenues.

Overall Analysis

The dataset reveals a pattern of recovery and growth following initial losses in 2020, with strong revenue growth and high economic profitability peaking around 2022. Subsequently, profitability measures have declined, culminating in an economic loss and negative margin in 2025. This indicates challenges in maintaining profit levels despite relatively high revenues and may suggest increased costs, competitive pressures, or other operational factors impacting economic profit. The decline in both economic profit and economic profit margin, coupled with the revenue drop in 2025, highlights an area of concern requiring further investigation.