Nike Stock: Reasonably Priced or Still Too Expensive?​

Nike (NYSE: NKE) is one of the most recognizable athletic brands in the world. The company has numerous sponsorship deals with elite athletes, a long history, and an impressive product lineup. However, those factors haven't been enough to lift its stock price, which is down by more than 50% over the past five years.

For investors, one positive result of that poor performance is that at the current share price, Nike's dividend yield is an appealing 2.5%. However, there aren't many bright spots to point to beyond that. Based on what we can see today, it looks like Nike will continue to struggle as its sales growth remains stagnant.

A mixed bag for Nike's Win Now plan

Image source: Getty Images.

CEO Elliott Hill described the second quarter of fiscal 2026 as the middle innings of the company's comeback. Revenue inched up by 1% year over year, while net income fell by more than 30%.

Based on those results, claiming to be in the middle of a comeback may be premature, but the earnings report wasn't all doom and gloom. For the period, which ended Nov. 30, wholesale revenue -- the company's largest segment -- increased by 8% year over year. Meanwhile, Nike Direct revenue fell by 8%.

Tariffs and high costs for U.S. consumers are adding to the pressure on Nike's results. Those headwinds can cut into the gains of the wholesale segment and amplify the losses of Nike Direct.

Global sales are down

Nike's North American revenue was up by 9%, but sales in all other regions fell. In the European, Chinese, and Asia Pacific & Latin American regions, revenues sank by 1%, 16%, and 4%, respectively.

International sales make up more than half of Nike's revenue. If they continue to decline due to tariffs, trade wars, and rising competition, it will put a further drag on Nike's ability to grow.

North American sales growth is a key reason why Nike's executives believe that the company's comeback in underway. However, Nike is already extremely well-known and established in these markets, which may limit its potential for further growth in the region. U.S. companies often turn to international markets to reinvigorate their growth once they have saturated the North American market.

Apparel is the only Nike line achieving meaningful growth

Another concerning sign is that apparel was Nike's only growing segment, and that part of the business was only up by 4% year over year. Equipment and footwear sales were roughly flat year over year. While equipment is a small part of the business, footwear provides more than 60% of total revenue.

So footwear sales must grow for Nike to stage a real turnaround, but that isn't happening so far in fiscal 2026. The growth rate in the apparel segment has also decelerated. In the first half of fiscal 2026, apparel sales were up by 7% year over year. However, the 4% growth rate in fiscal Q2 was a meaningful deceleration.

Nike executives have been pouring capital investments into their turnaround efforts, but that doesn't mean a comeback is in the cards for this dividend stock. Investors may want to steer clear of Nike for now.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.