Nike Executive Summary

Is Nike Worth the Buy? Thomas Senyard Issue It has been a workweek since Nikes analyst meeting in which management unveiled a plan to revitalize the company. Kimi Ford wonders, is Nike a good buy for her coarse fund? Background Nikes recent market share has been declining. The unexampled strategy that management introduced plans to develop a better mid-priced shoe, to push their array line and to put more effort into expense control. Lehman Brothers say that Nike is a strong buy, but UBS Warburg and CSFB analysts recommend not buying right now.Analysis on that point are several different methods that can be used to go back the WACC and use it to decide whether a stock will be a good buy or not. The Earnings Capitalization Model is not appropriate in this case because it does not work well for suppuration companies, as Nike is trying to do, and the Dividend Discount Model has several subjective inputs devising it inferior to the CAPM method of determining WACC. Using this meth od Nikes WACC is represent to be 9. 8%.Using this Nike is found to have very good returns on capital, with a reasonable amount of debt, at not too extravagantly of a cost. This WACC figure is higher than the one that Ford used, but it allay shows us that the stock is undervalued, but by only about $15. This leads to a recommendation that Fords mutual fund should add Nike to its portfolio, and from the pecuniary and debt ratios calculated, we get information that says Nike should continue to grow to higher stock prices aft(prenominal) reaching the price it was valued at today.