Nike (NKE 1.59%) has long been the king of athletic apparel and footwear on a global stage. This is supported by an iconic brand and broad visibility with well-known athletes and top sports leagues. It's a company that needs no introduction, generating over $46 billion in revenue in fiscal 2025 (ended May 31).
However, this consumer discretionary stock has been a dud. Investors would've lost 55% of their starting capital over the trailing five-year stretch (as of Jan. 12). Nike is trying to right the ship. Is it a buy-and-hold-forever stock?
Image source: Nike.
Earnings remain under pressure
In fiscal 2025, Nike reported diluted earnings per share (EPS) of $2.16, which represented a 42% year-over-year decline. In fiscal 2026, the consensus analyst estimate calls for diluted EPS to drop 28%. Higher tariffs and heavy promotional activity in China are two contributing factors to the disappointing profit trends.
Nike is also feeling the pain from slowing demand. In fiscal 2023, the company posted strong year-over-year revenue growth of 9.6%. The top line was down 9.8% last fiscal year. And analysts forecast just a 1% gain for fiscal 2026.
It can be extremely difficult for investors to want to put money to work when the business in question is operating from a seriously weak fundamental position. Nike is in the middle of a major turnaround, as it looks to improve innovation and distribution after making mistakes in these areas during the COVID-19 years.
NYSE: NKE
Key Data Points
Investors should move with caution
I won't argue with the fact that Nike still possesses immense brand power. Its gross margin, while under pressure, was still 40.6% in Q2 2026 (ended Nov. 30). Historically, this metric has proven that the business has pricing power. Consumers still flock to limited-edition new releases. Management is working on product newness to drive customer excitement. And the company's marketing prowess is still second-to-none in the sportswear market and top-notch regardless of industry. That's a key competitive advantage that will keep the business relevant and allow Nike to operate from a favorable position.
Based on the current state of the business, though, Nike is far from a buy-and-hold-forever stock. Investors who have much greater risk tolerance might be inclined to take a small position in this company. If Nike's fortunes improve drastically sooner rather than later, this could be a big winner in the next few years. Another plausible scenario is that it takes much longer than anticipated for management to orchestrate a successful turnaround, which would make Nike stock dead money for an extended period of time.
