I need assistance creating a 7 slide presentation with the following information: Introduction

The analysis will illustrate whether Nike, Inc. stock is undervalued, overvalued, or valued correctly. Several ratios, referenced below in Table 1, will be used to make that determination, with a comparison to the company's main competitor, Adidas. The ratios will show where each company stands and whether those comparisons warrant an investment in Nike. A recommendation will be given based on the analysis and a comparison to analyst ratings. The report will show that Nike, Inc. is undervalued and is a worthwhile investment based on future market projections.

Market Ratio Analysis

Investors use market ratio analysis and a company's financial statements to determine whether purchasing its stock is a worthy or risky investment. One of the ratios used is the Price-to-Earnings (P/E) ratio, which can indicate future market expectations, representing the cost investors pay for current and future earnings (Dahlquist & Knight, 2022, 11.1, para. 2). One of the keyways to use this ratio is to compare to other company's P/E that give valuable data, in Table 1. Nike's P/E is 27.14, which means an investor will pay that amount for every dollar the company earns but cannot compare it to its main competitor, Adidas, because their financials are not showing this ratio; this could be due to the company operating at a loss. Also, the forward P/E for each company is vastly different, with Nike's ratio at 23.90 versus their competitors at 71.95. Nike is priced more reasonably for future earnings versus Adidas.

Another ratio used is the Price-to-Book (P/B) ratio, which evaluates the company's current market value to book value, which is the market value of the price of all outstanding stocks (Dahlquist & Knight, 2022, 11.1, para. 15). The book value is the company's assets versus in relationship to the stock price (Dahlquist & Knight, 2022, 11.1, para. 15). Nike's current P/B is 9.80 which is higher than Adidas's 8.70, which could suggest Nike is slightly overvalued compared to Adidas. Another metric used is shown in Table 1, the Price-to-Cash Flow (P/CF) ratio, which compares a company's per-share stock price with operating cash flow (Dahlquist & Knight, 2022, 11.1, para. 27). The P/CF for Nike is 21.37, which is better compared to Adidas at 39.05, and an indication Nike could be undervalued, but other factors such as the development of each company must be taken into consideration.

Investors must consider dividends per share and dividend yield before investing in a company's stock. Dividend yield is a valuable equity metric for comparing cash returns across different investment opportunities. It measures the percentage return investors receive from dividends relative to the stock's price(Dahlquist & Knight, 2022, 11.1, para. 15) . Nike has a higher dividend per share and dividend yield compared to Adidas, suggesting that Nike might be a better option for investors seeking income through dividends.

Considering these metrics, Nike is a valued company, if not slightly undervalued, compared to Adidas based on specific ratios like Price/Cash Flow and Price/Forward Earnings. However, stock valuation is a complex process, and investors should conduct further analysis beyond just market ratios before making investment decisions. It is advisable to consider the company's growth prospects, competitive positioning, industry trends, and overall market conditions before deciding whether to buy the stock. Considering the data and metrics between Nike, Inc., and Adidas AG, I recommend buying Nike stock.

Analyst Ratings

Based on the analysis of ratings, my decision to invest with Nike, Inc. agrees with most of the MarketWatch.com analyst recommendations. The current recommendation for the stock is overweight, meaning they believe the stock should perform better in the future. This year's earnings are projected to be $3.72 versus $3.24 a year ago but estimated at $4.40 in the next fiscal year (Marketwatch.com, 2024). The stock price is currently at $92.26, with median and high targets of $115 and $130, respectively, with an average projection of $110.80 and a low of $75, due to my analysis and the analyst ratings of Nike. Inc (Marketwatch.com, 2024). The stock is undervalued, and I recommend buying it.

Reflection

The reflection on this assignment was eye-opening, as it showed how difficult it is to measure whether to invest in a company's stock. Often, based on a company's exposure, the assumption is that they are profitable and would be an excellent investment for an amateur investor, but that could be far from the truth. There are many metrics to consider when making investments versus going instincts. Also, there are no guarantees when investing because many factors are involved, from financial to product development to debt, and many other factors to consider in the company's current and future. The assignment has given me some understanding of what to look for in investing to have a productive conversation with a professional.