Invest in Nike

Nike, Inc. (NKE) has proven itself victorious within the apparel/footwear industry over the past ten years. Its success will only continue to grow as the company seeks to maintain quality growth through innovation of not only its main brand, but also in its highly profitable affiliates like Hurley, Cole Haan, Umbro, Converse and NikeGolf. Though the majority of Nike’s (NKE) business is done in North America, the company also fairs well in Europe and Japan and is marketing the “untapped potential” of China and other Asian sports-driven economies (Roger Wyatt – Affiliates Update).

Shareholders stand to gain substantial returns investing in Nike (NKE). At its most recent Investor Update Meeting, CEO and President Mark Parker presented an overview of the company’s historical success. In the last ten years, Nike (NKE) has paid out $3.4 billion in dividends, more than tripled its Market Cap, increased EPS by 14%, doubled the company’s overall revenue and increased its Gross Margin by five points (Mark Parker – Overview).

With its business plan, Nike (NKE) is looking forward to the future as well. Last year it announced a goal of $27 billion in revenue by 2015. As of July 2011, Nike (NKE) is ahead of schedule so Nike (NKE) revised the goal to between $28 and $30 billion (Mark Parker – Overview).  Nike (NKE) plans to meet this goal by creating strong consumer connections (especially in the digital realm), innovative products, and creating, growing and transforming the apparel/footwear marketplace. Such avenues are the emerging markets in China and Brazil which will host both the World Cup and the Olympics in 2012 (Charlie Denson – Brand Update).

Nike’s (NKE) current Market Cap of around $35.9 billion places it far above its top four industry competitors; Coach, Inc. (COH), VF Corporation (VFC), Ralph Lauren Corporation (RL), and PVH Corporation (PVH). Currently, CNN Money reports the Market Cap of Coach, Inc. (COH) at $18.3 billion, VF Corporation (VFC) at 15.2 billion, Ralph Lauren (RL) at $8.7 billion and PVH Corporation (PVC) at only $4.6 billion ( NASDAQ adds its recommendations for Nike (NKE), stating the company stock presents itself as a strong buy and hold (

On a slightly negative note, Nike (NKE) brand revenue was understandably down by 21% in the Japanese market this year, but the company is up and running again after the country’s tsunami disaster and recovering nicely (Gary DeStefano – Brand Geography Update). However, the overall Nike (NKE) revenue is up 10% from 2010 so the seasonal downfall in Japan did not have widespread negative effects.

Another negative is the stock price. Investors will have to pay top dollar for a chance to reap the benefits of Nike (NKE) with the average stock price in the mid to upper 90s. The investment is well worth it, though. Nike (NKE) currently holds a P/E ratio of 20.8 (

Overall, the corporate mission “To bring inspiration and innovation to every athlete in the world” seems to be working well for Nike (NKE), with the potential earnings growth of 15% within the next five years ( Investors would be wise to place their money in a highly successful and continually growing company such as Nike (NKE).