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GuruFocus has detected 2 Warning Signs with Nike Inc $NKE.
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Nike Inc (NYSE:NKE)
Intrinsic Value: Projected FCF
$26.62 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Nike Inc's projected FCF intrinsic value is $26.62. The stock price of Nike Inc is $55.47. Therefore, Nike Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 2.1.

NKE' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 0.83   Max: 4.3
Current: 2.08

0.83
4.3

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Nike Inc was 4.30. The lowest was 0.83. And the median was 1.67.

NKE's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
69% of the 331 Companies
in the Global Footwear & Accessories industry.

( Industry Median: 1.33 vs. NKE: 2.08 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Nike Inc's FCF(6 year avg) is calculate as

Nike Inc Quarterly Data

201411201502201505201508201511201602201605201608201611201702
total_freecashflow 6391,8671,102164257590942444728803
201205201208201211201302201305201308201311201402201405201408
total_freecashflow 7154285672721,1673731265161,118421
201105201108201111201202
total_freecashflow 713-27365208

Add all the Free Cash Flow together and divide 6 will get Nike Inc's FCF(6 year avg) = $2,416.33.

Nike Inc's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Feb17)*0.8)/Shares Outstanding
=(14.3620385799*2416.33333333+12722*0.8)/1686.300
=26.62

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Nike Inc's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=55.47/26.6151174495
=2.08

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Nike Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
Projected FCF 11.3412.6112.3513.5613.6314.9417.5920.2625.4524.38

Nike Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
Projected FCF 22.0425.1025.4525.0824.9124.8124.3825.2825.8926.62
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