Validea Detailed Fundamental Analysis

Validea's guru fundamental report rates NIKE INC (NKE) at 88% using the Partha Mohanram P/B Growth Investor model, which identifies low book-to-market stocks with characteristics for sustained future growth. As a large-cap footwear stock, NKE largely passes the model's criteria, failing only on Research and Development to Assets, with an 88% score indicating 'some interest' from this academically-derived strategy known for identifying outperforming growth stocks.

Analysis

Below is Validea's guru fundamental report for NIKE INC (NKE). Of the 22 guru strategies we follow, NKE rates highest using our P/B Growth Investor model based on the published strategy of Partha Mohanram. This growth model looks for low book-to-market stocks that exhibit characteristics associated with sustained future growth. NIKE INC (NKE) is a large-cap growth stock in the Footwear industry. The rating using this strategy is 88% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest. The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria. | BOOK/MARKET RATIO: | PASS | | RETURN ON ASSETS: | PASS | | CASH FLOW FROM OPERATIONS TO ASSETS: | PASS | | CASH FLOW FROM OPERATIONS TO ASSETS VS. RETURN ON ASSETS: | PASS | | RETURN ON ASSETS VARIANCE: | PASS | | SALES VARIANCE: | PASS | | ADVERTISING TO ASSETS: | PASS | | CAPITAL EXPENDITURES TO ASSETS: | PASS | | RESEARCH AND DEVELOPMENT TO ASSETS: | FAIL | Detailed Analysis of NIKE INC More Information on Partha Mohanram About Partha Mohanram: Sometimes the best investing strategies don't come from the world of investing. Sometimes research that changes the investing world can come from the halls of academia. Partha Mohanram is a great example of this. While academic research has shown that value investing works over time, it has found the opposite for growth investing. Mohanram turned that research on its head by developing a growth model that produced significant market outperformance. His research paper "Separating Winners from Losers among Low Book-to-Market Stocks using Financial Statement Analysis" looked at the criteria that can be used to separate growth stocks that continue their upward trajectory from those that don't. Mohanram is currently the John H. Watson Chair in Value Investing at the University of Toronto and was previously an Associate Professor at the Columbia Business School. Additional Research Links About Validea: Validea is aninvestment researchservice that follows the published strategies of investment legends. Validea offers both stock analysis and model portfolios based on gurus who have outperformed the market over the long-term, including Warren Buffett, Benjamin Graham, Peter Lynch and Martin Zweig. For more information about Validea, click here The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. NIKE INC (NKE) receives a favorable rating of 88% from Validea's P/B Growth Investor model, a quantitative strategy developed by Partha Mohanram to identify high-growth stocks with sustainable upward trajectories. This score indicates a notable interest from the model, approaching its threshold for a 'strong' conviction. The analysis reveals that NKE, a large-cap footwear company, successfully meets eight of the nine fundamental criteria, demonstrating robust financial health. Key strengths include passing tests for Return on Assets (ROA), Cash Flow from Operations to Assets, and low variance in both ROA and sales, which collectively point to operational efficiency and predictable performance. However, the company fails the model's criterion for Research and Development to Assets. This single point of weakness suggests that, relative to its asset base, NKE's R&D expenditure is considered insufficient by this specific growth-oriented screen, even while its spending on advertising and capital expenditures meets the model's standards.

Key Decisions for Investors

• Investors with a quantitative growth strategy should view the 88% score and success across multiple fundamental metrics as a strong positive signal, reinforcing the case for NKE's operational and financial stability.
• It is prudent to further investigate the single failed metric, 'Research and Development to Assets', to determine if it signals a material risk to long-term innovation or is an acceptable trade-off given the company's strong performance in brand-building via advertising.
• This report can be used as a validation for an existing long position or as a catalyst for deeper due diligence, focusing on NKE's capital allocation priorities between R&D, advertising, and capital expenditures to drive future growth.