Intrinsic value of Nike Cl B - NKE

Previous Close

$51.37

  Intrinsic Value

$37.00

stock screener

  Rating & Target

sell

-28%

  Value-price divergence*

+3%

Previous close

$51.37

 
Intrinsic value

$37.00

 
Up/down potential

-28%

 
Rating

sell

 
Value-price divergence*

+3%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of NKE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 84.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.10
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  34,350
  36,171
  38,077
  40,073
  42,164
  44,356
  46,652
  49,059
  51,582
  54,228
  57,002
  59,912
  62,964
  66,166
  69,524
  73,048
  76,746
  80,626
  84,698
  88,971
  93,455
  98,162
  103,102
  108,288
  113,731
  119,445
  125,443
  131,739
  138,349
  145,288
  152,573
Variable operating expenses, $m
 
  31,142
  32,783
  34,501
  36,300
  38,186
  40,162
  42,234
  44,405
  46,682
  49,070
  51,560
  54,187
  56,942
  59,832
  62,865
  66,047
  69,386
  72,890
  76,568
  80,427
  84,478
  88,729
  93,192
  97,876
  102,794
  107,956
  113,374
  119,063
  125,035
  131,304
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  29,601
  31,142
  32,783
  34,501
  36,300
  38,186
  40,162
  42,234
  44,405
  46,682
  49,070
  51,560
  54,187
  56,942
  59,832
  62,865
  66,047
  69,386
  72,890
  76,568
  80,427
  84,478
  88,729
  93,192
  97,876
  102,794
  107,956
  113,374
  119,063
  125,035
  131,304
Operating income, $m
  4,749
  5,028
  5,294
  5,572
  5,864
  6,169
  6,490
  6,825
  7,177
  7,546
  7,933
  8,352
  8,778
  9,224
  9,692
  10,183
  10,699
  11,240
  11,807
  12,403
  13,028
  13,684
  14,373
  15,096
  15,855
  16,651
  17,487
  18,365
  19,287
  20,254
  21,269
EBITDA, $m
  5,465
  5,520
  5,811
  6,115
  6,434
  6,769
  7,119
  7,487
  7,872
  8,275
  8,699
  9,143
  9,609
  10,097
  10,610
  11,148
  11,712
  12,304
  12,925
  13,577
  14,262
  14,980
  15,734
  16,525
  17,356
  18,228
  19,143
  20,104
  21,113
  22,172
  23,283
Interest expense (income), $m
  98
  121
  141
  161
  183
  205
  229
  253
  279
  306
  335
  364
  396
  428
  463
  499
  536
  576
  618
  661
  707
  755
  806
  859
  914
  973
  1,034
  1,098
  1,166
  1,236
  1,311
Earnings before tax, $m
  4,886
  4,907
  5,153
  5,411
  5,681
  5,964
  6,261
  6,572
  6,898
  7,239
  7,598
  7,988
  8,382
  8,796
  9,229
  9,685
  10,162
  10,664
  11,190
  11,742
  12,321
  12,929
  13,567
  14,237
  14,940
  15,679
  16,453
  17,267
  18,121
  19,017
  19,959
Tax expense, $m
  646
  1,325
  1,391
  1,461
  1,534
  1,610
  1,690
  1,774
  1,862
  1,955
  2,051
  2,157
  2,263
  2,375
  2,492
  2,615
  2,744
  2,879
  3,021
  3,170
  3,327
  3,491
  3,663
  3,844
  4,034
  4,233
  4,442
  4,662
  4,893
  5,135
  5,389
Net income, $m
  4,240
  3,582
  3,762
  3,950
  4,147
  4,354
  4,570
  4,797
  5,035
  5,285
  5,546
  5,831
  6,119
  6,421
  6,737
  7,070
  7,419
  7,784
  8,168
  8,571
  8,994
  9,438
  9,904
  10,393
  10,907
  11,445
  12,011
  12,605
  13,228
  13,883
  14,570

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,179
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  23,259
  17,986
  18,934
  19,927
  20,967
  22,056
  23,198
  24,395
  25,650
  26,966
  28,345
  29,792
  31,310
  32,902
  34,572
  36,324
  38,163
  40,092
  42,117
  44,242
  46,472
  48,813
  51,269
  53,848
  56,555
  59,396
  62,378
  65,509
  68,796
  72,247
  75,869
Adjusted assets (=assets-cash), $m
  17,080
  17,986
  18,934
  19,927
  20,967
  22,056
  23,198
  24,395
  25,650
  26,966
  28,345
  29,792
  31,310
  32,902
  34,572
  36,324
  38,163
  40,092
  42,117
  44,242
  46,472
  48,813
  51,269
  53,848
  56,555
  59,396
  62,378
  65,509
  68,796
  72,247
  75,869
Revenue / Adjusted assets
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
  2.011
Average production assets, $m
  2,277
  2,387
  2,513
  2,645
  2,783
  2,927
  3,079
  3,238
  3,404
  3,579
  3,762
  3,954
  4,156
  4,367
  4,589
  4,821
  5,065
  5,321
  5,590
  5,872
  6,168
  6,479
  6,805
  7,147
  7,506
  7,883
  8,279
  8,695
  9,131
  9,589
  10,070
Working capital, $m
  10,587
  4,992
  5,255
  5,530
  5,819
  6,121
  6,438
  6,770
  7,118
  7,483
  7,866
  8,268
  8,689
  9,131
  9,594
  10,081
  10,591
  11,126
  11,688
  12,278
  12,897
  13,546
  14,228
  14,944
  15,695
  16,483
  17,311
  18,180
  19,092
  20,050
  21,055
Total debt, $m
  3,802
  4,030
  4,613
  5,225
  5,866
  6,537
  7,240
  7,978
  8,750
  9,561
  10,411
  11,302
  12,237
  13,218
  14,246
  15,326
  16,458
  17,647
  18,894
  20,203
  21,577
  23,019
  24,532
  26,120
  27,788
  29,538
  31,375
  33,304
  35,328
  37,454
  39,686
Total liabilities, $m
  10,852
  11,080
  11,663
  12,275
  12,916
  13,587
  14,290
  15,028
  15,800
  16,611
  17,461
  18,352
  19,287
  20,268
  21,296
  22,376
  23,508
  24,697
  25,944
  27,253
  28,627
  30,069
  31,582
  33,170
  34,838
  36,588
  38,425
  40,354
  42,378
  44,504
  46,736
Total equity, $m
  12,407
  6,907
  7,271
  7,652
  8,051
  8,470
  8,908
  9,368
  9,850
  10,355
  10,885
  11,440
  12,023
  12,634
  13,276
  13,949
  14,655
  15,396
  16,173
  16,989
  17,845
  18,744
  19,687
  20,678
  21,717
  22,808
  23,953
  25,156
  26,418
  27,743
  29,134
Total liabilities and equity, $m
  23,259
  17,987
  18,934
  19,927
  20,967
  22,057
  23,198
  24,396
  25,650
  26,966
  28,346
  29,792
  31,310
  32,902
  34,572
  36,325
  38,163
  40,093
  42,117
  44,242
  46,472
  48,813
  51,269
  53,848
  56,555
  59,396
  62,378
  65,510
  68,796
  72,247
  75,870
Debt-to-equity ratio
  0.306
  0.580
  0.630
  0.680
  0.730
  0.770
  0.810
  0.850
  0.890
  0.920
  0.960
  0.990
  1.020
  1.050
  1.070
  1.100
  1.120
  1.150
  1.170
  1.190
  1.210
  1.230
  1.250
  1.260
  1.280
  1.300
  1.310
  1.320
  1.340
  1.350
  1.360
Adjusted equity ratio
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,240
  3,582
  3,762
  3,950
  4,147
  4,354
  4,570
  4,797
  5,035
  5,285
  5,546
  5,831
  6,119
  6,421
  6,737
  7,070
  7,419
  7,784
  8,168
  8,571
  8,994
  9,438
  9,904
  10,393
  10,907
  11,445
  12,011
  12,605
  13,228
  13,883
  14,570
Depreciation, amort., depletion, $m
  716
  491
  517
  543
  570
  599
  630
  661
  695
  730
  766
  791
  831
  873
  918
  964
  1,013
  1,064
  1,118
  1,174
  1,234
  1,296
  1,361
  1,429
  1,501
  1,577
  1,656
  1,739
  1,826
  1,918
  2,014
Funds from operations, $m
  2,499
  4,073
  4,278
  4,493
  4,718
  4,953
  5,200
  5,459
  5,730
  6,015
  6,313
  6,622
  6,950
  7,294
  7,655
  8,034
  8,432
  8,849
  9,286
  9,746
  10,228
  10,734
  11,265
  11,823
  12,408
  13,022
  13,667
  14,344
  15,054
  15,801
  16,584
Change in working capital, $m
  -1,141
  251
  263
  275
  289
  302
  317
  332
  348
  365
  383
  402
  421
  442
  464
  486
  510
  535
  562
  590
  619
  650
  682
  716
  751
  789
  828
  869
  912
  958
  1,005
Cash from operations, $m
  3,640
  3,822
  4,015
  4,217
  4,429
  4,651
  4,883
  5,127
  5,382
  5,649
  5,930
  6,220
  6,529
  6,852
  7,192
  7,548
  7,921
  8,313
  8,725
  9,156
  9,609
  10,084
  10,583
  11,107
  11,657
  12,234
  12,839
  13,475
  14,142
  14,843
  15,578
Maintenance CAPEX, $m
  0
  -455
  -477
  -503
  -529
  -557
  -585
  -616
  -648
  -681
  -716
  -752
  -791
  -831
  -873
  -918
  -964
  -1,013
  -1,064
  -1,118
  -1,174
  -1,234
  -1,296
  -1,361
  -1,429
  -1,501
  -1,577
  -1,656
  -1,739
  -1,826
  -1,918
New CAPEX, $m
  -1,105
  -111
  -126
  -132
  -138
  -145
  -152
  -159
  -167
  -175
  -183
  -192
  -201
  -211
  -222
  -233
  -244
  -256
  -269
  -282
  -296
  -311
  -326
  -342
  -359
  -377
  -396
  -416
  -436
  -458
  -481
Cash from investing activities, $m
  -1,008
  -566
  -603
  -635
  -667
  -702
  -737
  -775
  -815
  -856
  -899
  -944
  -992
  -1,042
  -1,095
  -1,151
  -1,208
  -1,269
  -1,333
  -1,400
  -1,470
  -1,545
  -1,622
  -1,703
  -1,788
  -1,878
  -1,973
  -2,072
  -2,175
  -2,284
  -2,399
Free cash flow, $m
  2,632
  3,256
  3,412
  3,583
  3,762
  3,950
  4,146
  4,352
  4,568
  4,794
  5,031
  5,276
  5,536
  5,810
  6,097
  6,397
  6,713
  7,044
  7,392
  7,756
  8,139
  8,540
  8,962
  9,404
  9,868
  10,355
  10,867
  11,404
  11,967
  12,559
  13,180
Issuance/(repayment) of debt, $m
  1,748
  559
  584
  612
  641
  671
  703
  737
  773
  810
  850
  891
  935
  981
  1,029
  1,079
  1,133
  1,188
  1,247
  1,309
  1,374
  1,442
  1,513
  1,588
  1,667
  1,750
  1,837
  1,929
  2,025
  2,126
  2,231
Issuance/(repurchase) of shares, $m
  -2,734
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -809
  559
  584
  612
  641
  671
  703
  737
  773
  810
  850
  891
  935
  981
  1,029
  1,079
  1,133
  1,188
  1,247
  1,309
  1,374
  1,442
  1,513
  1,588
  1,667
  1,750
  1,837
  1,929
  2,025
  2,126
  2,231
Total cash flow (excl. dividends), $m
  1,803
  3,815
  3,996
  4,195
  4,403
  4,621
  4,850
  5,089
  5,341
  5,604
  5,881
  6,167
  6,471
  6,791
  7,125
  7,477
  7,846
  8,233
  8,639
  9,065
  9,512
  9,982
  10,475
  10,992
  11,535
  12,105
  12,704
  13,332
  13,992
  14,684
  15,411
Retained Cash Flow (-), $m
  -149
  -348
  -364
  -381
  -399
  -418
  -438
  -460
  -482
  -505
  -530
  -556
  -583
  -611
  -641
  -673
  -706
  -741
  -777
  -816
  -856
  -899
  -943
  -990
  -1,039
  -1,091
  -1,145
  -1,202
  -1,262
  -1,325
  -1,391
Prev. year cash balance distribution, $m
 
  5,848
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  9,315
  3,632
  3,813
  4,003
  4,202
  4,411
  4,630
  4,859
  5,099
  5,351
  5,611
  5,889
  6,179
  6,484
  6,804
  7,140
  7,492
  7,861
  8,249
  8,656
  9,083
  9,531
  10,002
  10,496
  11,014
  11,559
  12,130
  12,730
  13,359
  14,020
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  8,931
  3,325
  3,319
  3,296
  3,257
  3,201
  3,128
  3,037
  2,929
  2,805
  2,665
  2,513
  2,349
  2,177
  1,998
  1,814
  1,630
  1,448
  1,270
  1,100
  939
  791
  656
  535
  428
  337
  260
  197
  146
  106
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

NIKE, Inc. is engaged in the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories and services. The Company's operating segments include North America, Western Europe, Central & Eastern Europe, Greater China, Japan and Emerging Markets. Its portfolio brands include the NIKE Brand, Jordan Brand, Hurley and Converse. As of May 31, 2016, the Company focused its NIKE brand product offerings in nine categories: Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Men's Training, Women's Training, Action Sports, Sportswear (its sports-inspired lifestyle products) and Golf. Men's Training includes its baseball and American football product offerings. It also markets products designed for kids, as well as for other athletic and recreational uses, such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities. The Company sells a range of performance equipment and accessories under the NIKE Brand name.

FINANCIAL RATIOS  of  Nike Cl B (NKE)

Valuation Ratios
P/E Ratio 19.9
Price to Sales 2.5
Price to Book 6.8
Price to Tangible Book
Price to Cash Flow 23.2
Price to Free Cash Flow 33.3
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.3%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio 19
Current Ratio 0
LT Debt to Equity 28%
Total Debt to Equity 30.6%
Interest Coverage 51
Management Effectiveness
Return On Assets 19.4%
Ret/ On Assets - 3 Yr. Avg. 17.9%
Return On Total Capital 27.8%
Ret/ On T. Cap. - 3 Yr. Avg. 26.5%
Return On Equity 34.4%
Return On Equity - 3 Yr. Avg. 30.8%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 44.6%
Gross Margin - 3 Yr. Avg. 45.6%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 16.4%
Operating Margin 13.8%
Oper. Margin - 3 Yr. Avg. 13.8%
Pre-Tax Margin 14.2%
Pre-Tax Margin - 3 Yr. Avg. 14.1%
Net Profit Margin 12.3%
Net Profit Margin - 3 Yr. Avg. 11.6%
Effective Tax Rate 13.2%
Eff/ Tax Rate - 3 Yr. Avg. 18%
Payout Ratio 26.7%

NKE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NKE stock intrinsic value calculation we used $34350 million for the last fiscal year's total revenue generated by Nike Cl B. The default revenue input number comes from 2017 income statement of Nike Cl B. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NKE stock valuation model: a) initial revenue growth rate of 5.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NKE is calculated based on our internal credit rating of Nike Cl B, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Nike Cl B.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NKE stock the variable cost ratio is equal to 86.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NKE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Nike Cl B.

Corporate tax rate of 27% is the nominal tax rate for Nike Cl B. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NKE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NKE are equal to 6.6%.

Life of production assets of 3.4 years is the average useful life of capital assets used in Nike Cl B operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NKE is equal to 13.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12407 million for Nike Cl B - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1643.23 million for Nike Cl B is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Nike Cl B at the current share price and the inputted number of shares is $84.4 billion.

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COMPANY NEWS

▶ Why Nike Inc (NKE) Stock Will Hit $60 in Less Than a Year   [Oct-17-17 06:10AM  InvestorPlace]
▶ 3Q17 Earnings Preview: Whats in Store for Skechers?   [Oct-16-17 02:58PM  Market Realist]
▶ Amazon: Not This Time!   [12:28PM  Barrons.com]
▶ Is Nike Inc. a Buy?   [08:30AM  Motley Fool]
▶ 3 Stocks That Put Nike's Returns to Shame   [10:47AM  Motley Fool]
▶ Amazon Is Getting Into Sportswear   [03:19PM  Bloomberg]
▶ [$$] Nike's Followers Want to Be Led   [12:52PM  Barrons.com]
▶ Why Nike Is Taking the Discount Route   [Oct-12-17 04:35PM  Bloomberg Video]
▶ Nike Flash Sale 'Unprecedented' As Teens Ditch Iconic Brand   [04:10PM  Investor's Business Daily]
▶ Nike's $50B Revs Target "Out of Reach"   [03:49PM  Barrons.com]
▶ 3 Value Stocks for Conservative Investors   [04:38PM  Motley Fool]
▶ Cramer's lightning round: Let Nike walk these losses off   [Oct-10-17 07:04PM  CNBC Videos]
▶ General Electric, Nike Sink DJIA on Monday   [Oct-09-17 04:01PM  24/7 Wall St.]
▶ These 3 Stocks Weighed on the Dow's Gains in Q3   [Oct-08-17 09:03AM  Motley Fool]
▶ 3 Things Nike Inc. Wants You to Know   [Oct-06-17 12:52PM  Motley Fool]
▶ Nike's $700-plus self-lacing shoes get their patents   [Oct-05-17 07:44PM  American City Business Journals]
▶ Nike Still Has 2 Strong Cards to Play   [11:43AM  GuruFocus.com]
▶ Adidas built the factory of the future   [10:22AM  Yahoo Finance Video]
▶ Yahoo Finance Live: Market Movers - Oct 5th, 2017   [07:20AM  Yahoo Finance Video]
▶ For Adidas and rivals, sponsorships are good business   [Oct-04-17 04:34PM  Associated Press]
▶ Nike Trips and Falls to Near a 2-Year Low   [Oct-03-17 06:20PM  Motley Fool]
▶ Lyft nabs Nike strategist to lead Oregon operations   [04:45PM  American City Business Journals]
▶ Spiros Segalas Divests Nike and O'Reilly in 3rd Quarter   [Oct-02-17 06:53PM  GuruFocus.com]
▶ What the traders bought today: 7 trades   [05:00PM  CNBC Videos]
▶ Nikes Earnings Fell 22% in 1Q18: Heres Why   [09:13AM  Market Realist]
▶ Let's Put Nike's Bad Quarter in Context   [05:00PM  Motley Fool]
▶ Nike Looks to the NBA for Salvation   [Sep-30-17 11:35AM  Motley Fool]
▶ September to Remember; Micron and Nike: Best of Cramer   [Sep-29-17 09:00PM  TheStreet.com]
▶ Nike, Merck Weigh on DJIA Friday   [04:01PM  24/7 Wall St.]
▶ [$$] Meet Nike sneaker legend Tinker Hatfield   [12:00AM  Financial Times]
▶ "Fast Money" final trades: DAL, NKE and more   [Sep-28-17 05:59PM  CNBC Videos]
▶ Buy Micron, Ditch Nike, Says Jim Cramer   [05:07PM  Investopedia]
▶ LIVE BLOG: Closing Bell Edition   [03:18PM  TheStreet.com]
Financial statements of NKE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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