Is Buying Nike Stock Now a Brilliant Move or a Disaster Waiting to Happen? Here's the Answer and What to Do Next.

The turnaround strategy for iconic retail brand Nike (NYSE: NKE) still appears to be in the process phase rather than the progress phase. For its fiscal 2027 first-quarter earnings, results were mixed. According to CNBC-tracked estimates, Nike beat on earnings per share, reporting $0.48 instead of an expected $0.43.

Where it fell short, however, was in revenue, at $11.2 billion, with expectations set at $11.3 billion. It also expects revenue for its fiscal year to decline by a high-single-digit percentage, and it's working on restructuring plans that are expected to lead to job cuts. From an investment opportunity, here's what I'd do with Nike.

Image source: The Motley Fool.

Why I'd wait on buying Nike stock

With Nike, it's at a point where its turnaround strategy almost needs a turnaround strategy of its own. The problems appear to be deeper than the management team initially perceived, as it now faces not only a sales slump in Greater China but also declines in its Sportswear and Jordan divisions.

Job cuts may reduce expenses, but they still won't reignite enthusiasm for the brand to increase sales. And with those sales expected to be lower in its 2027 fiscal year, I would be perfectly fine avoiding the stock until it shows a few consecutive quarters of beating expectations and can eventually boost its forecasts. Even though shares are down 77% over the last five years and it may seem like a rebound candidate, there's nothing to say the stock price can't keep heading lower.

Where to invest instead

Looking past Nike, for those interested in companies showing progress in their turnaround or stabilization efforts, I would research Johnson & Johnson (NYSE: JNJ) and Sirius XM Holdings (NASDAQ: SIRI).

Instead of being a bulky conglomerate, Johnson & Johnson spun off its consumer healthcare division, Kenvue, in 2023. That's allowed Johnson and Johnson to focus on advanced medical technology and pharmaceuticals, with that focus showing up as gains in the stock price. Over the last 12 months, shares of Johnson & Johnson have risen 38%.

For Sirius XM, it's been more about stabilization than a full turnaround. As the streaming music space has become increasingly competitive, Sirius has experienced subscriber losses, with the stock price down 58% over the past five years. But it's showing progress in attracting new listeners, with 22,000 self-pay net additions in the second quarter of 2026.

In its 2026 second-quarter earnings report, it also announced it was boosting its 2026 forecasts for revenue, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), and free cash flow.Shares are up a little more than 13% in the last 12 months, but have jumped 28% in 2026 alone.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool recommends Johnson & Johnson and Kenvue. The Motley Fool has a disclosure policy.