Nike Inc. (NYSE:NKE)

The analysis of the financial ratios indicates several noteworthy trends over the reported periods.

Return on Assets (ROA)

ROA shows variability with notable peaks and troughs throughout the timeline. Initially, values rise to a peak around the May 2019 period, reaching close to 17%. A significant decline follows in the subsequent quarters, dipping to around 8% during mid-2020, likely reflecting impacts from external factors. Recovery occurs progressively, with values stabilizing near the mid-teens between mid-2021 and early 2024. However, a downward trend is noticeable toward the most recent quarters, decreasing to approximately 12% by early 2025. This suggests a recent erosion in asset profitability.

Financial Leverage

The financial leverage ratio fluctuates but generally remains within a range of about 2.5 to 3.9. There is a peak in financial leverage during mid-2020 at nearly 3.9, indicating increased use of debt or financial obligations at that time. Following this peak, leverage steadily decreases to levels around 2.6 to 2.7 in subsequent years, indicating a reduction in financial risk or a strategic deleveraging effort. The ratio remains relatively stable throughout the later periods, implying consistent capital structure management.

Return on Equity (ROE)

ROE exhibits significant volatility with a strong upward trend peaking near the end of 2019 and early 2020, reaching close to 49%. This is followed by a pronounced decline into the low 20% range by early 2021, reflecting potential challenges impacting equity returns. A recovery trend takes place subsequently, with ROE stabilizing in the mid to high 30s through most of 2022 to mid-2024. Despite occasional fluctuations, there is a mild downward movement evident toward the latest periods, ending around 32% by early 2025. This indicates diminishing returns on equity in the most recent quarters.

In summary, asset utilization and equity returns both experienced peaks around early 2020 before facing declines, with gradual recovery thereafter. Financial leverage surged briefly in mid-2020 but was subsequently curtailed and maintained at more conservative levels. The recent decrease in ROA and ROE suggests a cautious outlook on profitability, while stable leverage indicates controlled financial risk management.

The analyzed financial data reveals several noteworthy trends in profitability, efficiency, leverage, and shareholder returns over the examined periods.

Net Profit Margin (%)

The net profit margin exhibits an overall upward trend from mid-2018 through early 2022, increasing from around 10.3% to a peak of approximately 13.32% in February 2022. Following this peak, there is a gradual decline in net profit margin, falling steadily to about 9.43% by February 2025. This pattern suggests enhanced profitability in earlier years, followed by a reduction in profit relative to revenue in the most recent periods.

Asset Turnover (ratio)

The asset turnover ratio shows an initial decrease from about 1.65 in mid-2019 to a low near 1.06 in May 2021, indicating a reduction in how efficiently assets generate sales during this timeframe. Subsequently, asset turnover improves gradually, rising to around 1.40 by early 2024 before experiencing a slight decline to approximately 1.27 by February 2025. This indicates a recovery in asset utilization efficiency after earlier softness.

Financial Leverage (ratio)

Financial leverage fluctuates between 2.5 and 3.89 over the entire period. It peaks notably at 3.89 in mid-2020, reflecting a substantially higher use of debt relative to equity at that time. After this peak, leverage trends downward, stabilizing near 2.6 to 2.7 in the more recent periods. This suggests a move towards a more conservative capital structure following elevated leverage during the 2020 period.

Return on Equity (ROE) (%)

ROE follows a pattern broadly similar to net profit margin, starting at 44.57% in mid-2019 and rising to nearly 48.89% by early 2020, signifying strong profitability on shareholders' equity. Thereafter, there is a sharp decline to below 27% by early 2021, coinciding with increased financial leverage and reduced asset turnover, possibly reflecting operational challenges. ROE subsequently recovers, fluctuating around the 36% to 42% range through late 2023 before gradually decreasing to about 32.18% by early 2025.

In summary, the data reveals a period of strong profitability and efficiency up to early 2020, followed by a downturn through mid-2021 likely related to adverse operating conditions marked by decreased asset turnover and increased leverage. Afterward, efficiency and returns gradually improve, though recent trends suggest some softness in profitability margins and returns on equity toward the end of the period.

Net Profit Margin

The net profit margin exhibits an overall fluctuating trend from the available data beginning in May 2019 through February 2025. Initial values near 10.3% increase gradually with peaks above 13% observed between November 2020 and May 2022, indicating improved profitability during this period. Subsequently, a decline is noted from mid-2022 through early 2025, with margins tapering down to around 9.4% by February 2025. This downward trend in recent periods suggests margins have been under pressure, possibly due to increased costs or competitive factors.

Asset Turnover

Asset turnover shows a decrease starting from May 2019 with a high of 1.65 moving downward to lows near 1.1 by early 2021, suggesting reduced efficiency in generating sales from assets during this phase. From then onward, it demonstrates a recovery trend with incremental increases peaking near 1.4 around the end of 2023. Following this peak, slight declines return asset turnover ratios to approximately 1.27 by early 2025, signaling a mild reduction in asset utilization efficiency toward the later periods.

Return on Assets (ROA)

The ROA data reflects considerable volatility with values around 17% in mid-2019, followed by a sharp fall to approximately 8% during 2020, which may signify external challenges impacting asset profitability. Starting late 2020, ROA recovers significantly, reaching about 16% by mid-2021, mirroring improvements in both profit margin and asset turnover. After mid-2021, ROA trends gradually downward to near 12% by February 2025, demonstrating a reduction in overall asset efficiency and profitability in recent years. This mirrors the declining net profit margins and slight decrease in asset turnover toward the end of the period.