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I'm buying Nike stock and I'm really excited about it in fact I already owned some shares and guys the stock is down big it's at $74 per share when it's all-time high not very long ago November 5th 2021 was 180 per share it is down over 60% and for those of you who are true investors this should excite you so guys back in January I did a video of the five stocks I wanted to buy this year when it hit the right value I don't care I mean Nike even if they don't yeah even if they don't grow and they said I'm still want to pay 17 18 times earnings for that desire return I'm doing nine 10 and a half and 12 boom low price basically 60 high price on one of the assumptions is there 115 and 125 middle price 8090 I'm going to add it to my watch list at $90 a share okay as a place to start selling puts on it yeah it's on my watch list at 100 now year to date the stock is down 30% back then I don't think it made much sense to me but now the price is becoming a lot more attractive and I want you to become the kind of investor who gets excited when a great company stock price Falls so why has it been falling well one thing is earnings just came out recently they missed on Revenue they beat they crushed on earnings per share but Footwear Revenue also missed and apparel Revenue did beat so they missed on two things they beat on two now it's interesting I always say that news follows a stock price and what I'm seeing now is all these other companies who've beaten Nike to the running game there's not much mention of Jordan brand there's not much mention of LeBron and his shoes and how they're all crushing it there's not much mention of apparel and how they're still crushing it this is where news follows the stock price because the stock is down 60% from its high of nearly 180 so what are the fundamentals on Nike so first off guys you have $13 billion market cap okay this is a company that do $6.2 billion in free cash flow last year and look at this Enterprise value of 126 this difference of 13 billion is essentially their debt they can pay off their debt in full with two years of their last year's free cash flow that's a great balance sheet forget about Nike being an amazing company and an amazing brand the fact that the balance Sheet's so good really speaks volumes about it now dividend yield 1.88% which was a lot lower when the stock was much higher it eats up $2 billion of their of their free cash flow guys you'll hear me say it time and time again I know we love dividends I like getting dividends but Dividends are the last thing that a company should do with their cash if this stock was fortunate enough to go from 74 down to 40 I would hope and this will not happen but I would hope that Nike would stop this dividend and start buying back at shares because at that point the market cap would be what 60 billion or so they could buy back 3% of their shares every single year with that dividend payment that's going to be much better for investors than anything they're going to do with that dividend I know Dividends are awesome it's a nice check to receive but it's tax inefficient and when you're buying back shares you've done it the right price and the light right valuation adds way more value to investors now guys look at this return on invested Capital this is a sign of a good moat this is a sign of a strong company that has pricing power this is we want to see companies with higher roic's tend to last longer tend to be able to build on their profit at a much better rate than everybody else now let's go check out our of course our important eight pillars now remember the eight pillars tell a story they're not telling you to buy or sell they're telling you a story and right now we have two x's now you might be sitting there saying well wait a second Paul 23 times 5year PE 25 times free cash flow and this is something you're buying remember guys you need to pay a premium promote businesses businesses that are great Brands deserve a premium what is the right premium everything else is a check Revenue growth 10.3 billion in the last five years that led to only $900 million in net income growth but led to 2.8 billion dollars in free cash flow growth debt low shares outstanding buying back a few shares but again I don't want them buying back expensive shares so this story is telling me okay maybe it's a pricing thing but what premium you want to pay because remember look at this look at their free cash flow now the one-year free cash flow multiple is only 18 because their fiveyear average was four and a half billion versus their one year of 6.2 so their free cash flow has really increased a lot in the last year is that stable are they going to grow from there that is the question that really matters when valuing companies here because obviously the more growth you have the worse this ratio is going to look now a lot of people have been talking about how Nike is losing the shoe game I don't understand how but look at this Nike plans a100 doll and less shoe after sales plummet following a sales slump now some people might sit there and say this is great they're sitting there saying we need to refocus now one thing I love that the CEO said which was very revealing to me he blamed the lack of product Innovation to allowing other competitors to come in and steal some market share from Nike I love that admission to me that's not a c just telling me what I want to hear the stock is down and he made a negative assessment on his company and to me it also said to others in the company guys let's innovate better let's be a better company yes it's wonderful to have a $250 shoe but you're Nike if you want to grow your revenue and profit to much bigger levels you're going to have to be able to expand the people you sell to guys this is the Q4 fiscal year 2024 the breakdown 8.2 billion in Footwear down 4% 3.3 billion in apparel up 3% 6 billion in equipment up 34% so there's a lot of growth potential here and finally Converse $500 million down 18% year-over-year so guys two growth categories to declining they got to turn this thing around but if they're able to turn that around they're going to be able to really grow the profit and free cash flow this company now here's another cool thing China 3% year-over-year growth rest of the world decline of 2% but China's a growing Market you've got the largest middle class 1.6 billion people yes they've had a decline in population last year but a lot of people making more and more money do you think that's going to help Nike sales or not yes there's a lot of Chinese Footwear companies out there I do not disagree with that they've gotten some us athletes to sign on which is great but Nike is still Nike and of course Jordan brand what a Big Brand look at these Jordan sales as a percentage of Nike sales it is growing started at 7% in 2014 had a little decline in 18 and 19 now 133% of all of Nike sales guys I think Jordan gets in like 5% I don't know if the the movie was accurate but he gets checks of 200 300 million dollars a year for his share of the Nike Revenue which is absolutely incredible now here's Nike's Revenue every quarter of the last five years now it's been pretty stagnant actually guys since Q4 2021 pretty stagnant levels so they're going to be invigorated here they got to get back to growth mode this is something important for Nike and for the investors to find appealing of course selfishly I want them to stagnate for a while that way people continue to sell the stock and it goes lower and lower and lower so I can dollar cost average at much lower prices if I'm able to do that then Nike as long as it sticks around and grows like the company I think it is over the next 10 or 20 years I will make a great return on the money invested into thaty from my pocket now guys this is Nike's North American revenue from 2009 to 2023 by segment okay the biggest one growth right here 344 to 764 um million in equipment and we still we still see growth in every category actually this is the biggest one sorry apparel 1.74 billion to almost $6 billion do that is Big Time growth in fact equipment I was wrong is actually the smallest one but look at this Revenue overall 6.8 billion to 21.6 guys remember there's always going to be a lot of negative news following any stock that declines the question is how do you take away the news that really matters versus the news just following the stock price now let's go see what analysts are saying about Nike now remember these are just analysts they have probably more bias than you and I do because they have career risk if they're wrong they need to be around the curve so EPS growth from 378 this year to 636 this is double digigit growth almost every single year okay so not bad a lot of growth still there for Nike Revenue growth boy I literally am reading articles about Nike losing its position and this is examples of news following stock price guys if you've watched our videos before these are the three questions I ask when involving when when I look for a company I want to buy one do I think this company will be around for the foreseeable future will Nike be around for 10 20 30 plus years what does our world look like if 30 years from now there's no Nike okay two do I think they're going to have more revenue and profit in this future than they have today again do you think Nike has staying power forget about the where the stock price has gone look at the fundamentals of the business and number three if the answers to one and two are correct are yes can I pay a price today that factors in this future growth and gives me a good return on the money that I'm investing that is the ultimate question if you're able to answer all three of those as a yes today then it's probably something you want to look at and I think Nike fits that criteria but what is the right price for Nike now guys you've probably noticed that we have limited daily spots for everything money community and our software and the reason for that is because the software as it exists today includes everything we have to offer for stocks retirement and real estate in all of these tools above okay now we are going to be making some changes behind the scenes so in the near future the current offer that's on the site today is going away as we've been getting feedback from our community members people have said they want us to focus on particular aspects of our everything money tools and don't want too many options when they're using the software we don't want to be the Cheesecake Factory of software now remember if you remember this channel from years ago I built the softare software selfishly for myself and my team so that we can use it to constantly help make the right decisions for stocks real estate and retirement but as the Channel's grown and our community is grown it's becoming less about me and more about how I can better serve you but the good news is we have not made those changes yet so if you join the software today you'll be grandfathered in for life with all of the tools and this is going to be the best deal we're ever going to offer and I'm telling you this now because obviously there still is time for you to sign up as long as you join the EM Community today before before you make the changes you'll be able to keep all the tools so click the link in the description below to get access to everything money and everything we have to offer and it'll be the best decision you've made all year so one of those decisions is what's the right price to pay for Nike so this is our stock analyzer tool I'm doing a 10-year analysis remember guys this does not factor in any of the balance sheet okay so Revenue growth first I did three five and s% for my low middle and high all right profit margin I did 10 11 and 12 and the same with free cash flow a little bit higher than history because I figured with they're more direct to Consumer selling there'll be a higher margin for them so they should be able to bump up those cash flow and earnings margins now what's the PE at the end of 10 years that you would assigned to Nike it's a premium company guys the market average is 15 but you got to pay a premium for great companies I put 20 23 and 26 now if you said 30 to me I'd say yeah I could see the argument for that if you said 15 I'd be like you know that's kind of low for Nike it's somewhere in between I don't know the exact number that's what makes the software so great for you you can pick based on your perception and understanding of Nike I feel like 2023 and 26 is a great PE and price to free cash flow for Nike and finally I put in a 9% return why because the Market's going to do nine or 10% so this is the market return this has no margin of safety you need your margin of safety because you're buying an individual company if you just want to match the market buy a lowc cost ETF we're humans we make mistake and the future is unknown so you need a higher return for that margin of safety but based on the market return hit the analyze button I have a low price of 61 high price of 120 middle price of 86 and this includes the dividend so for me I feel like I'm adequately buying at price is it goes lower remember focus on the fact that you want the stock price to go lower and don't forget to click in the description below to sign up for our software today thank you for your time