Nike Inc. BNKE

Morningstar Rating

Stock Research and Analysis

by Brady Lemos

We think Nike's iconic image, diversified product portfolio, and global presence are attributes that rivals like Adidas and Under Armour UA cannot match. We're convinced that Nike will maintain its market dominance by capitalizing on promising growth opportunities, global scale advantages, and a history of product innovation. Read more

Bulls Say

Nike owns one of the world's most valuable brands and can charge premium prices for its products.

The company spends more than $2 billion per year on advertising and endorsement contracts to elevate and add credibility to its brand.

Nike has significant power over its suppliers and retail customers. For example, Nike merchandise accounts for more than half of total purchases by Foot Locker FL and Finish Line FINL.

Nike's presence in soccer, a sport critical to driving international sales, is on the rise through partnerships with popular clubs, such as Brazil and Manchester United.

Nike+, a collaboration with Apple's AAPL iPod, is now the world's largest running club. Read more

Bears Say

The U.S. athletic footwear and apparel market is fiercely competitive and largely stagnant. Industry players must fight each other for any share gains.

Adidas' U.S. market share jumped significantly after it acquired Reebok in 2006. Even though Nike remains the market leader, it now must compete with a larger competitor.

Virtually all of Nike's merchandise is sourced from outside the U.S. Any disruption in the company's supply chain could hurt earnings.

Nike can struggle when fashion trends shun athletic footwear. Read more

Strategy

To achieve a more consistent revenue stream, Nike has expanded its portfolio by acquiring niche footwear and apparel companies including Converse, Umbro, and Hurley. Nike is also focused on international expansion--particularly in emerging markets in Asia and South America--where the greatest growth opportunities exist. Read more

Management

Mark Parker was named CEO in 2006 following the resignation of William Perez, who clashed with founder and chairman Phil Knight. We think Nike is in good hands with Parker at the helm. A Nike employee for nearly 30 years, most recently serving as co-president with Charlie Denson, Parker brings plenty of industry experience. Read more

Profile

Nike is the world's largest athletic footwear and apparel brand. International sales to more than 180 countries account for more than half of the company's total revenue. Read more

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