Ray Dalio was fired from Wall Street before he built one of the world's largest hedge funds out of his apartment

Nike continues to face mounting criticism from Wall Street analysts. Stifel analyst Peter McGoldrick recently lowered his earnings-per-share estimates for fiscal years 2027 and 2028 by $0.20, citing near-term risks from increased promotional activities on Nike products in the US. The analyst also noted that the Hoops Classics segment, which contributes 18% of revenue, is shrinking.

A new CFO and the Investor Day on November 16-17 do not provide incentives for Nike management to raise expectations in the near term. Nike's P/E ratio stands at 17x for fiscal year 2027, significantly higher than the footwear industry median of 11x. Analysts foresee risk to the multiple if Nike fails to meet its turnaround timeline again.

The stock has experienced a 44% decline this year and a 51% drop over the past year. Notably, soccer star Kylian Mbappé recently ended his business partnership with Nike and joined Swiss sports giant On. Nike's stock will be removed from the S&P 100 index, marking the end of an 18-year tenure. In August, Dick's Sporting Goods expressed concerns about Nike's business due to heavy discounts on slow-moving products.

Moreover, Nike reported a 1% decline in fiscal fourth-quarter revenue, and a 4% drop in currency-neutral terms. While diluted earnings per share of $0.72 appeared stronger year-over-year, this was heavily influenced by a significant $0.52 per share one-time gain from an anticipated tariff recovery. The company continues to grapple with execution challenges under CEO Elliott Hill, who returned to Nike in October 2024 and replaced the CFO recently.

Changing consumer preferences, cautious shoppers, and aggressive competitors like On are impeding Nike's progress, hindering any indications of a turnaround. Nike projected first-quarter revenues to decline by low-to-mid-single-digit percentages. The company reiterated flat earnings per share growth over the next three quarters, excluding benefits from tariff recovery proceeds.

Analyst Michael Binetti of Evercore ISI expressed skepticism about Nike's prospects, stating that there are no clear reasons to raise the P/E ratio from its current 22x consensus earnings per share.