DCF Studio

    NKE · NYQ · Consumer Cyclical

    NIKE, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 24.61

    Market price

    USD 35.51

    Implied upside

    -30.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 24.61-30.7%
    Exit multiple
    USD 31.75-10.6%
    Market price
    USD 35.51

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 44.9bnUSD 43.4bnUSD 42.0bnUSD 40.7bnUSD 39.4bn-3.2%
    EBITUSD 4.5bnUSD 4.3bnUSD 4.2bnUSD 4.1bnUSD 3.9bn-3.2%
    NOPATUSD 3.7bnUSD 3.6bnUSD 3.5bnUSD 3.3bnUSD 3.2bn-3.2%
    Add depreciation & amortisationUSD 761.3mUSD 736.6mUSD 712.8mUSD 689.7mUSD 667.3m-3.2%
    Less capital expenditureUSD -659.5mUSD -638.1mUSD -617.4mUSD -597.4mUSD -578.1m-3.2%
    Less increase in working capitalUSD -234.1mUSD -226.6mUSD -219.2mUSD -212.1mUSD -205.2m-3.2%
    Free cashflow to firmUSD 3.6bnUSD 3.4bnUSD 3.3bnUSD 3.2bnUSD 3.1bn-3.2%
    Discount factor0.95340.86660.78780.71610.6509-
    Present valueUSD 3.4bnUSD 3.0bnUSD 2.6bnUSD 2.3bnUSD 2.0bn-12.0%
    Present Value Of The ForecastUSD 13.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.074Reported 1.110, pulled toward 1.0 (Blume)
    Cost of equity10.90%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 52.7bn82.7% of capital
    Total debtUSD 11.0bn17.3% of capital, book value as a proxy
    Tax rate17.7%Effective, capped at statutory
    WACC10.01%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 24.61

    65% of EV

    Forecast FCFF, final year
    USD 3.1bn
    Capex at depreciation, working capital in reinvestment
    USD 3.3bn
    Less reinvestment at g/ROIC (14.0% of NOPAT)
    USD -461.4m
    Capitalised
    USD 2.8bn
    ROIC (reported)
    17.8%
    Terminal value, undiscounted
    USD 38.6bn
    Terminal value, discounted
    USD 25.1bn
    Enterprise value
    USD 38.5bn
    Less net debt
    USD 2.0bn
    Equity value
    USD 36.4bn

    Exit at 11.9x EBITDA

    Value per shareUSD 31.75

    73% of EV

    Terminal value, undiscounted
    USD 54.8bn
    Terminal value, discounted
    USD 35.7bn
    Enterprise value
    USD 49.0bn
    Less net debt
    USD 2.0bn
    Equity value
    USD 47.0bn

    Spread between methods: 25%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.01%30.4431.6833.1334.8636.96
    9.01%26.4827.2928.2229.3030.56
    10.01%23.4423.9924.6125.3126.11
    11.01%21.0421.4221.8422.3122.84
    12.01%19.0919.3619.6519.9720.33

    Outlined: this model. Green text: above today's price of 35.51. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-3.2%4.0%+7.2pp
    EBIT margin10.0%14.2%+4.2pp
    Discount rate10.0%7.6%-2.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.