NIKE, Inc.NKENYSE

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DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $65.57 per share(market-calibrated)

+10.4%

Upside to Fair Value

Current

$59.39

Pure Model

$65.17

Fair Value

$65.57

Bull Case

$80.05

Bear Case

$51.51

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

3.98%

Calibrated Growth

3.15%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $65.17.

What's Driving This Ratingfor NKE

✓

CapEx already efficient

CapEx at 1.58% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

→

Moderate revenue growth

Analyst consensus projects 0.87% revenue growth, fading to 3.00% by Year 10. Revenue reaches $71.7B (vs $46.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $53.22/share (16.2x terminal FCF) while exit multiple gives $77.13/share (28.4x terminal FCF). The 20x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 3.98% is close to the model's 3.00% (only 98bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 70.50% indicates efficient cash generation. FCF reaches $7.1B by Year 10 (9.96% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.28

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.26%

Cost of Debt

Pre-tax Cost of Debt2.57%

Tax Rate17.14%

After-tax Cost of Debt2.13%

Equity Weight (E/V)88.89%

Debt Weight (D/V)11.11%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.89% × 10.26%) + (11.11% × 2.13%)

= 9.35%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$46.7B	$50.6B	$58.3B	$64.4B	$71.7B
EBIT	$5.8B	$6.2B	$7.2B	$8.0B	$8.8B
Tax	$988M	$1.1B	$1.2B	$1.4B	$1.5B
NOPAT	$4.8B	$5.2B	$6.0B	$6.6B	$7.3B
+ Depreciation	$837M	$907M	$1.0B	$1.2B	$1.3B
- Capex	$739M	$801M	$922M	$1.0B	$1.1B
- Δ NWC	$65M	$347M	$541M	$482M	$337M
Free Cash Flow	$4.8B	$4.9B	$5.5B	$6.2B	$7.1B
Discount Factor	0.914	0.765	0.640	0.535	0.409
Present Value	$4.4B	$3.8B	$3.5B	$3.3B	$2.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$7.1B

Terminal Growth Rate3.00%

WACC9.35%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$115.8B

PV of Terminal Value$47.4B

Exit Multiple Method

Year 10 EBITDA$10.1B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$202.6B

PV of Terminal Value$82.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$35.2B

PV of Terminal Value$47.4B

Enterprise Value$82.6B

(-) Net Debt$3.6B

Equity Value$79.0B

Shares Outstanding1.5B

Price per Share$53.22

Exit Multiple Method

PV of Projected FCFs$35.2B

PV of Terminal Value$82.9B

Enterprise Value$118.1B

(-) Net Debt$3.6B

Equity Value$114.5B

Shares Outstanding1.5B

Price per Share$77.13

Pure Model Fair Value

$65.17

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
7.35%	$79.83	$82.28	$85.28	$89.07	$93.99
8.35%	$70.38	$71.95	$73.82	$76.07	$78.83
9.35%	$62.87	$63.94	$65.17	$66.62	$68.33
10.35%	$56.68	$57.43	$58.29	$59.28	$60.41
11.35%	$51.46	$52.01	$52.62	$53.32	$54.11

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$51.51

-13.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.60

Base Case

$65.17

9.7% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.28

Bull Case

$80.05

34.8% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.09

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.87%

Year 3 Revenue Growth4.43%

Year 5 Revenue Growth6.09%

Year 7 Revenue Growth4.86%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin12.34%

Tax Rate17.14%

Historical Capex / Rev1.58%

NWC / Revenue16.16%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Cyclical sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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