After a profitable company has fallen so out of favor and the stock price has been so beaten up, a feeling can build that the sell-off has been overdone. That may be what some feel about, or are hoping for, with Nike (NKE -0.09%), as the share price has fallen 77% over the past five years.
That said, there's one stat that's hard to ignore when considering whether to start or add to a position in the iconic shoemaker.
Image source: The Motley Fool.
Don't bet that the worst is over
Over the years, Nike has made a series of missteps, including shunning wholesalers by focusing more on selling directly to customers and failing to meet changing consumer tastes through innovation. Elliott Hill has been trying to lead a revival of the brand since becoming CEO in 2024, but it's been slow going.
When the company reported earnings for its fiscal first quarter of 2027 on Oct. 1, its revenue was $11.2 billion, down 4% from the prior-year period. While Nike can at least say it's profitable, that profitability, too, is shrinking, as its net income of $712 million was a 2% decline.
NYSE: NKE
Key Data Points
As bad as all that was, the most worrisome stat from the earnings report was that full-year revenue is likely to decline by high single digits. That means the next few quarters could keep getting worse, so this likely isn't the end of the stock price's woes.
Even though shares have sunk by around 77% over the past five years, there doesn't appear to be a catalyst on the horizon to reverse the losses -- aside from a surprisingly strong earnings report, which Nike seems to be warning is unlikely. At this point, before starting or adding to a position, it seems better to watch Nike's turnaround efforts from the sidelines and wait for a few good quarters to ensure there's real momentum to reverse the losses from the past five years.
