Benjamin Graham Detailed Fundamental Analysis

Validea's fundamental report indicates NIKE INC (NKE) rates highest among 22 guru strategies using its Benjamin Graham-based Value Investor model, achieving a 71% score. This deep value methodology screens for low P/B and P/E ratios, low debt, and strong long-term earnings growth. While NKE passed several criteria including long-term EPS growth and debt metrics, it notably failed the P/E and Price/Book ratio tests, suggesting it does not fully meet the strict valuation requirements of the Graham strategy, as its 71% score falls below the 80% threshold for 'some interest'.

Analysis

According to a Validea fundamental report, NIKE INC (NKE) receives a 71% rating based on a Benjamin Graham-inspired Value Investor model. This score is notable for being below the 80% threshold that typically indicates strategic interest, suggesting NKE does not currently qualify as a compelling opportunity under this deep value framework. The analysis reveals a dichotomy: while NKE demonstrates fundamental strength by passing criteria for sales, current ratio, long-term debt relative to net current assets, and long-term EPS growth, it fails on key valuation metrics. Specifically, its Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios are too high to meet the stringent requirements of the Graham strategy. This indicates that while the underlying business is operationally sound with a healthy balance sheet, its market valuation positions it as a premium-priced, large-cap growth stock rather than an undervalued asset.

Key Decisions for Investors

• Strict value investors should note that Nike fails to meet crucial valuation criteria (P/E and P/B ratios) in the Graham model, suggesting it may be overvalued for a deep value portfolio.
• Investors with a growth or GARP (Growth at a Reasonable Price) mandate may find the company's strong fundamentals, particularly its solid long-term EPS growth and low debt, to be attractive points that could justify its premium valuation.
• Consider monitoring NKE for a potential price correction, as a significant pullback could bring its valuation multiples into a more favorable range for value-oriented entry points.