NIKE, Inc. (NKE) stock intrinsic value fair value estimate & owner earnings analysis

Nike's owner earnings - the cash left after capital spending and stock compensation - have swung widely, ranging over the past decade from $0.61 to $3.80 per share and averaging about $2.19. The recent collapse is the concern: $3.80 in fiscal 2024, then $1.72 and $0.99. The damage was largely self-inflicted. Nike pushed into direct-to-consumer selling, straining ties with the retailers who move most of its shoes, and oversupplied its classic sneakers until they lost appeal. Management is deliberately pulling that product back - about $2 billion of classic franchise sales removed in fiscal 2026 - and clearing excess inventory at a discount. Both crush near-term profit. Because this is a business problem rather than an economic one, we treat it as a real measure of Nike's volatility. Our bear case assumes the reset only partly works and rivals keep the share they took, with earnings reaching about $1.50 per share (11.5% discount rate). The base case assumes Nike rebuilds to roughly its ten-year average near $2.25 over five years (9.5%). The bull case assumes a fuller recovery toward $3.20 (8.5%). Recovery is slow in all three: management guided next year's sales lower, tariffs are a rising cost, and last year included a one-time tariff refund. Nike also carries about $3.1 billion of lease commitments. The brand is durable and debt is roughly offset by cash, so we anchor on the base case - but with only moderate confidence in the turnaround we apply about a 50% discount, putting the margin-of-safety price near the bear value, a level the bear case still supports if recovery disappoints.