Nike is a strong brand with negative growth and a high future P/E ratio; investors should only buy if the valuation is fair to avoid poor performance.

Nike did not succeed in that. I want us to talk about Nike's numbers , guys, because they weren't impressive after the market closed yesterday.

Nike. These companies are struggling, and they are struggling mostly not because of consumers who have a lot of discretionary money, but because of consumers who don't, right?

As an investor, as someone in this world who is aware of the fact that many people are struggling to make ends meet, that means there are some buying opportunities. Some of those companies are amazing and get really cheap, and they outperform the markets they operate in.

That's a macroeconomic thing, isn't it? This macroeconomy is weak now, and it is not individual companies that are suffering , but rather the sectors that have declined, and these companies are outperforming their sectors.

Now, here’s the thing: there are great opportunities, but when it comes to the macroeconomy, you don’t know how long it will take before things return to normal and improve again so that you can make profits as an investor.

After the break, we will talk about the latest results from Nike . Nike announced its earnings after the market closed yesterday, Lou , I think that's interesting. There are many lessons for investors, but the stock has fallen by about 81% from its peak just five years ago.

They said revenue fell by 4% this quarter, but even worse, revenue is expected to fall by a significant single digit for this fiscal year. It seems that nothing is going well for Nike at the moment.

No, some of these reasons are personal, and others are beyond their control. I mean , there are two sides to this story. Firstly, they miscalculated. They said we no longer need retail trade.

We will only sell directly to consumers. They have burned a lot of bridges with very important partners , and this is still having a negative impact on them.

But I also don't know if that will change anything anyway. The world has changed. You only need one good Instagram influencer to launch a brand. It's not like it was in the 1980s when Nike could just pump money into big stars and dominate.

There are a trillion more brands now, and you'll never get that

The company is still huge. It's still a good brand. It will continue to exist. It will not be the same as before, and with each quarter, the blows continue.

Yes, this is still an exceptional and amazing business. Like other investors, it's easy to get hung up on seeing a stock down 80% and say, "Man, that's a losing stock." It's still a great activity, but everything is different now than it was 10, 15 or 20 years ago.

Western markets are very mature. You know, if you go back to that time, people didn't wear sneakers in the same places they wear them now. So, that cake has grown and reached its maximum size.

It's growth that's basically in line with the GDP now, isn't it? Therefore, anyone who grows faster than the market is simply taking a share from someone else. This means that Nike has been playing a defensive role in its main markets for many years already.

So, if you put these two things together, investors really should have the right expectations about a company like Nike. I don't know if those predictions were exactly the same 4 or 5 years ago, or 3 years ago, or in 2024 when everything peaked and the valuation also reached its peak.

As a rule-breaker , don't misunderstand me. I am very happy to pay a high rating for a company that everyone thinks is grossly overpriced. But there needs to be a huge opportunity on the other side, and that's not the case for Nike's business at the moment.

So, pay attention to that, it may be a perfectly good company , but at this point you must pay a fair valuation or you are headed for poor performance.

Some of them are doing well and some of them are not . It seems that Nike is heading in a negative direction.

Let's start with the company we just talked about. It's Nike. Nike stock is currently trading at around $33 at the time of recording this episode. The price was $35 at yesterday's market close.

Jason, in 2030, will Nike's stock be higher or lower than $35 per share? Higher, and I would say it will be closer to $50. So Travis, you're giving me a compound annual growth rate of what?

1.18 here or something like that for this stock.

Yes, expectations are low, but over the past five years this stock would have lost by a large margin.

I think it will be higher. I mean, even $50, maybe that doesn't outperform the market. I think it will be higher, but it won't outperform the market. This is funny. I am a growth investor, but I am looking at a company with negative growth and a future P/E ratio that is still 23, and I would have chosen "lower".

I'm surprised that neither of you did that. The reason I think it will be higher is, again, the difference between the starting point and the end point and how to get there. I think things are going to be really choppy along the way, but I think they'll reach a point where they'll sort of rebalance things, and they'll have their advantage.

Even if their profit margins continue to erode slightly, their enormous power as buyers is still there, isn't it? And they gain some influence from that. So, I think this will help.

That size will still be useful , and I still think it will be a very profitable company. I think investors' expectations will change a little along the way as well, and we will reach a happy compromise where things will be all right.

Add to that a 5% dividend yield , which seems very safe to me at the moment.