Nike (NKE 1.72%) isn't looking like a growth stock these days. Shares are at an over-50% decline so far in 2022 after the company announced disappointing first-quarter results in late September. That report showed sales growth but also a few warning signs about the rest of the year.

Nike is facing challenges in two of its biggest markets, the U.S. and China, and inventory issues could produce further profitability declines that hurt earnings. But investors are being offered a big discount on the stock to reflect those challenges.

So, let's take a look at whether you should try to take advantage of the pessimism and buy Nike today.

The latest trends

Nike's latest results show signs of stress on the business. Sure, revenue rose at a 10% pace through late August, after adjusting for currency exchange-rate shifts. That boost was encouraging given challenges like slowing demand in the U.S. and lockdowns in China. "We have incredible momentum in key products and franchises across the spectrum of lifestyle and performance," CEO John Donahoe said in a conference call with Wall Street analysts .

Yet the global business isn't firing on all cylinders. Nike had to cut prices on slow-moving inventory in the U.S. market, which contributed to a two percentage-point drop in gross profit margin. Its 44% figure looks weak compared to Lululemon's 56% rate. The yoga apparel specialist is also growing more quickly, too, with U.S. sales up 25% in the most recent quarter.

The rebound plan

Nike might be through the worst part of this growth challenge. Executives say they believe inventory peaked this past quarter thanks to some aggressive promotions in late summer into early fall. Revenue trends in China, where sales fell 13% this past quarter, should improve thanks to the ending of pandemic lockdowns.

Still, Nike is in for a few more quarters of weak results. The promotional environment that hurt profit margin in Q1 should last, "at least through the end of the calendar year," executives said. And Nike is cautious about the same time period in China, too.

These factors helped convince Nike to lower its profit outlook, which calls for the current quarter to feature a steep drop in gross profit margin as the company clears the way for a hopefully smoother holiday shopping season ahead.

Buy or wait?

The stock price slump reflects that fact that, while earnings are almost sure to fall this fiscal year, there is no clear sign about the timing of any rebound. The 22% drop in net income this past quarter might give way to even worse declines in fiscal Q2 and beyond. Inventory metrics look troublesome today, too, even if management says Nike will be closer to a healthy supply and demand balance soon.

In exchange for those risks, you can buy Nike stock for less than three times annual sales. That's near the lowest valuation that investors have seen for the apparel giant in a decade. Lululemon is currently trading for about five times sales, by comparison.

That discount should help produce strong returns for investors who buy while Wall Street is so pessimistic about Nike's fiscal 2023, which will be marked by slowing growth and falling profit margins.

An eventual rebound in these metrics will power accelerated earnings ahead. But operating metrics should look worse before they get better. Be prepared for some bumpy results, and stock price volatility, if you're considering buying Nike right now.