That's just over one times its earnings growth rate even if the company only averages in the low teens. Moreover, during the past 15 years the stock has never traded at less than half the market multiple. But investors who do care about timing should consider the character of a depressed stock before jumping in. Some volatile tech stocks can plummet on a single piece of bad news and rocket back in a couple of days on an unexpected positive announcement. But consumer brands are different, because investors are paying for consistency.
Brand names hold the loyalty of both customers and investors.
That helps to support high valuations until a company fails to meet growth expectations. Once that happens, investors generally remain skeptical until there are clear signs of a sustainable turnaround. That'll be especially true with Nike because the company has disappointed before. Some analysts think the running shoe fad may have passed, which would mean that any growth rate reduction could be permanent. In fact, Nike probably isn't the growth stock it once was.