Today's economic woes haven't spared athletic brand Nike (NKE 1.20%). The stock has slipped almost 50% this year. That's as headwinds hurt earnings and investors shy away from stocks linked to consumer spending.

But Nike has been a stock known to deliver stock performance over the long term. Could this continue? Motley Fool contributors Adria Cimino and Jennifer Saibil present the bull and bear cases.

The bear case

(Adria Cimino): Nike's big problems these days have to do with inventory and margins, and this could seriously weigh on earnings. Nike is struggling with higher costs due to inflation, supply chain problems, and coronavirus interruptions in the key market of China. And the situation won't improve overnight.

In the recent fiscal first-quarter report, Nike said North America inventory ballooned 65% compared to the year-earlier period. The problem is some seasonal inventory arrived late -- and other items arrived too early. Nike clearly is having trouble managing its supply chain in the current environment.

The company made a decision that may be painful in the months to come: It plans on clearing out some of this inventory. And it's doing that through markdowns. Though this will help Nike make room for new collections, it's bad news for earnings.

As it stands today, Nike's gross margin already slipped 220 basis points in the quarter to 44.3%. The company expects its markdowns to weigh on gross margin for the full fiscal year, too. In fact, Nike predicts unfavorable foreign exchange rates, and higher transport and logistics costs also will hurt. As a result, for the year, Nike says gross margin probably will decline 200 to 250 basis points compared to the previous fiscal year.

Of course, Nike's valuation has dropped considerably. This is positive. But it still may not be enough to bring investors back to Nike right away.

Many investors may want to wait until Nike's inventory and supply chain problems settle. That could mean multiple months of stagnation for the stock -- or further declines.

Nike's long-term view still looks bright. But the company's current difficulties may get in the way of share price performance. And that's not the best news for current or potential investors.

The bull case

(Jennifer Saibil): Sure, Nike has been dealing with a spate of challenges in the current pressured macroenvironment that are not unique to its retailing operation. And there are competitors performing better right now. But the bigger picture demonstrates why you should consider buying Nike stock right now anyway.

First, Nike is still the top athletic brand by a long shot. Its trailing-12-month revenue is higher than all of its top competitors -- combined. Its revenue comes in higher than even almost any other regular apparel brand.

It also has the greatest brand name recognition from any apparel brand. For example, it consistently rates as the most popular apparel brand in Piper Sandler's annual Taking Stock With Teens survey. It came in as No. 1 again for most popular clothing brand in the 2022 report, with 30% of the responses, way ahead of the No. 2 spot, which belongs to American Eagle Outfitters at 7%.

That's even more pronounced in footwear, with Nike taking the top spot according to 60% of those surveyed, topping out Converse, which Nike owns, at 8%. Nike is building relationships with the next generation of shoppers, and with its size and brand power, it has created a large moat.

On to valuation. Nike's stock trades at 25 times trailing-12-month earnings, which is its lowest valuation in five years. 

NKE PE Ratio Chart

NKE PE Ratio data by YCharts

Considering its tanking stock price, 25 doesn't seem like an incredibly low price-to-earnings ratio. It's also above the S&P 500 average of 18, which dropped from 30 a year ago as the market has plunged. The elevated valuation takes into account investor confidence in Nike's ability to overcome current pressure and offer shareholders value for many years into the future.

Bull or bear?

In the near term, Nike stock may not be the biggest winner. The company still has hurdles ahead. But over time, Nike has what it takes to win.

A strong track record and loyal fans are two elements that should serve the company well. Considering that, today's valuation represents a good entry point for long-term investors.