Nike Inc. (NYSE:NKE)

Price to earnings (P/E) ratio

The price to earnings ratio displayed a notable increase from 33.72 in 2019 to a peak of 60.47 in 2020, indicating heightened investor expectations or market optimism during that period. Following this peak, the ratio declined steadily over the subsequent years, reaching a low of 18.78 in 2024. This downward trend suggests a normalization of earnings valuation or a more cautious market sentiment in recent years.

Price to operating profit (P/OP) ratio

A similar pattern to the P/E ratio is observed. The ratio rose sharply from 28.47 in 2019 to 49.29 in 2020, signaling elevated valuation relative to operating profit. After 2020, it steadily fell to 16.97 by 2024, reflecting a reduction in market premiums priced on operating income or improved operating profit performance relative to stock price.

Price to sales (P/S) ratio

This ratio increased from 3.47 in 2019 to 5.67 in 2021, peaking later than the P/E and P/OP ratios. Subsequently, a consistent decline is observed, falling to 2.08 in 2024. The decline indicates a decreasing valuation in terms of revenue, possibly due to either revenue growth not matching stock price increases or market reassessment of the company’s sales quality.

Price to book value (P/BV) ratio

The P/BV ratio rose from 15.03 in 2019 to its highest point of 19.79 in 2021. Afterwards, a sharp decline ensued, lowering the ratio to 7.42 by 2024. This sharp reduction could point to market adjustments in the valuation of the company’s net assets or a significant increase in book value not matched by the stock price increase.

Overall Trends and Insights

Across all four valuation metrics, the data consistently shows a peak in valuation multiples between 2020 and 2021, followed by a steady and significant decline through 2024. This suggests an overall market movement from relatively high optimistic valuations towards more conservative or value-based assessments. The convergence of lower ratios in 2024 may reflect either improved fundamentals such as earnings, operating profit, and book value growth or a lowering of stock price expectations. These trends highlight a transition period in market perception, possibly influenced by external market conditions or company-specific developments.

The analysis of the financial data over the six-year period reveals several noteworthy trends concerning the company's share price, earnings per share (EPS), and price-to-earnings (P/E) ratio.

Share Price

The share price demonstrated a variable trend, rising from $86.70 in 2019 to a peak of $159.74 in 2021, indicating a substantial increase in market valuation over this timeframe. Following this peak, the share price experienced a notable decline, decreasing to $71.41 by 2024. This decline suggests a decrease in market confidence or external factors impacting the stock negatively after 2021.

Earnings Per Share (EPS)

EPS displayed volatility but overall exhibited an upward trajectory. It began at $2.57 in 2019, dropped to $1.63 in 2020, which might reflect operational challenges or external economic conditions impacting profitability. From 2020 onwards, EPS steadily increased to reach $3.80 by 2024, implying improved profitability and operational performance in the later years.

Price-to-Earnings (P/E) Ratio

The P/E ratio fluctuated significantly during the period. It was elevated at 60.47 in 2020 following a drop in EPS, suggesting the share price was relatively high compared to earnings at that time—possibly due to market speculation or investor expectations. The ratio then decreased progressively to 18.78 by 2024, indicating that the share price is now relatively low compared to earnings, which may imply the stock has become more attractively valued or that investor sentiment has become more cautious.

Overall, the data reflects a period of growth and peak valuation around 2021, followed by a correction in share price despite improving earnings. The reduced P/E ratio by 2024 could indicate a market revaluation aligning closer to actual earnings performance or tempered market optimism.

Share Price Trend

The share price exhibited an overall volatile pattern over the six-year period. It increased steadily from $86.70 in May 2019 to a peak of $159.74 in May 2021. Following this peak, the share price declined significantly to $71.41 in May 2024, representing a considerable reduction from the high point reached in 2021. This suggests a period of market optimism until 2021, followed by notable investor caution or adverse market sentiment in subsequent years.

Operating Profit Per Share Trend

Operating profit per share demonstrated fluctuations but generally maintained a positive trend. It started at $3.05 in May 2019, decreased to $2.00 in May 2020, likely reflecting operational challenges or broader economic factors impacting profitability during that year. Afterward, there was a significant recovery with value peaking at $4.39 in May 2021, then slightly declining to $3.87 in May 2023 before rising again to $4.21 in May 2024. This indicates operational profitability improvements post-2020 downturn, although not exceeding the 2021 peak substantially.

P/OP Ratio Analysis

The price-to-operating-profit (P/OP) ratio showed notable variability across the years. It was relatively moderate at 28.47 in May 2019 before increasing sharply to 49.29 in May 2020, suggesting that the share price was high relative to operating profit during that year, possibly reflecting market expectations outpacing actual earnings. The ratio then decreased consistently from May 2021 (36.42) to May 2024 (16.97), indicating that the share price valuation became more aligned with operating profit or that operating profit growth outpaced share price performance. The low value in 2024 suggests the market might perceive the shares as undervalued relative to operating profit, or overall market valuation adjustments.

Overall Insights

The data suggest that while operational performance as measured by operating profit per share recovered and generally improved following an initial dip in 2020, market valuation experienced significant fluctuations. The peak in share price and valuation multiples around 2021 was followed by a substantial correction by 2024. This pattern may indicate external market or economic factors impacting investor sentiment beyond operational fundamentals, coupled with a resilient underlying operational profitability across the period.

Share Price Trends

The share price exhibited considerable fluctuations over the analyzed periods. It increased from $86.7 in May 2019 to a peak of $159.74 in May 2021, representing substantial growth over two years. However, following this peak, the share price declined significantly to $71.41 by May 2024, indicating a reversal in market valuation or investor sentiment in the more recent years.

Sales Per Share Trends

The sales per share demonstrated a generally upward trajectory across the years. Starting at $24.96 in May 2019, there was a slight dip in 2020 to $23.98, followed by consistent increases each subsequent year, reaching $34.26 by May 2024. This trend suggests steady growth in sales efficiency or revenue generation on a per-share basis despite short-term disruptions.

Price-to-Sales (P/S) Ratio Trends

The P/S ratio, which measures the company’s valuation relative to its sales per share, displayed a volatile pattern. It rose from 3.47 in 2019 to a high of 5.67 in 2021, indicating increasing investor willingness to pay more per unit of sales. Subsequently, the ratio declined considerably to 2.08 by 2024. This downward shift may reflect decreasing market confidence or a correction in valuation relative to sales performance.

Overall Insights

The observed data reveal a period of strong sales growth per share combined with volatile market valuation. Despite consistent sales increases, the share price did not maintain its peak levels, and the P/S ratio contracted after rising sharply. This pattern might suggest external market factors, shifts in investor expectations, or operational challenges impacting the stock performance independently of sales growth.

The financial data over the six-year period reveals several notable trends and shifts in the valuation and underlying metrics.

Share Price

The share price experienced a significant increase from 86.7 USD in 2019 to a peak of 159.74 USD in 2021. Following this peak, there was a marked decline to 111.62 USD in 2022, with a continuing downward trend to 71.41 USD by 2024, indicating a substantial loss in market value over the last two years.

Book Value Per Share (BVPS)

The book value per share showed a generally positive trend across the period. Starting at 5.77 USD in 2019, it briefly declined in 2020 to 5.16 USD but then steadily increased to 9.74 USD in 2022. It slightly decreased to 9.15 USD in 2023 before increasing again to 9.62 USD in 2024. This upward trend in BVPS suggests an improvement in the company’s net asset value on a per-share basis over time.

Price-to-Book Value Ratio (P/BV)

The P/BV ratio was particularly high at the beginning of the period, starting at 15.03 in 2019 and reaching nearly 20 in 2021, indicating that the share price was valued at a significant premium over the book value. This ratio sharply declined after 2021, dropping to 11.46 in 2022 and further down to 7.42 in 2024. This trend suggests a revaluation in the market’s perception of the company’s equity, aligning more closely with its book value and reflecting the falling share price relative to book value.

Overall, the data indicates that while the intrinsic value of the company, as measured by book value per share, has steadily improved, market sentiment and share price have become much more conservative post-2021. The declining P/BV ratio mirrors this shift, showing reduced investor optimism or potential market corrections after a period of high valuations. This divergence between share price and book value in recent years merits further investigation into external market factors or company-specific developments affecting market perception.