NIKE Stock Rebounds From Slump: What Drives the 20% Rally in 3 Months?

NIKE Inc. NKE stock has witnessed a strong rally in recent months, following a prolonged slowdown, led by tough operating conditions, including weakness in the lifestyle segment and a decline in digital sales, reflecting shifting consumer preferences. This raised concerns surrounding NIKE’s growth prospects. However, the stock has shown renewed momentum, thanks to the progress on its “Win Now” strategy, which has been showing promising outcomes. The company expects that wholesale order book recovery, strengthened partner confidence, fresher assortments and improved sell-through trends may position NKE for revenue acceleration in fiscal 2026.With its shares climbing 20.6% in the past three months, NIKE has outperformed the broader Shoes & Retail Apparel industry and the Consumer Discretionary sector, which have rallied 18.6% and 6%, respectively, year to date. The stock has also outpaced the S&P 500’s growth of 12.4% in the same period.NIKE’s 3-Month Price Performance Image Source: Zacks Investment Research Trends Driving NKE’s MomentumNIKE’s momentum in recent months reflects investors' growing optimism about the company’s reset under its “Win Now” strategy. Early signs of progress under the plan include leadership changes fostering an athlete-first mindset, product refreshes shifting away from aging franchises toward newer innovations like the Vomero 18, and sharper marketplace segmentation. Reinforced by sport-led storytelling and events such as the After Dark Run Series, these actions are helping restore brand momentum.A key momentum driver has been NIKE’s wholesale revival. After several years of prioritizing direct-to-consumer channels, the company is re-engaging with retailers like DICK’S Sporting Goods and JD Sports through tailored assortments, premium in-store presentations and exclusive launches.Distribution expansion into women’s boutiques, Urban Outfitters and Amazon is broadening reach, while wholesale revenue declines are narrowing, order books are improving and holiday orders are tracking higher year over year. These signs of recovery highlight growing retailer confidence in NIKE’s product pipeline and its ability to rebalance channels more effectively.Regional performance also underscores progress. North America is stabilizing, with digital sales seeing stronger full-price realization and fresh product introductions in running and training, driving better sell-through. In EMEA, women’s footwear returned to growth, supported by healthier inventory and lower markdowns, while APLA posted gains in performance categories despite broader sportswear softness. Together, these improvements suggest NIKE’s operational reset is gaining traction, fueling optimism for a revenue turnaround in fiscal 2026.Do NKE’s Estimate Revisions Reflect This Optimism?The Zacks Consensus Estimate for NIKE’s fiscal 2026 earnings per share (EPS) has declined by a penny in the past seven days. Meanwhile, the EPS estimate for fiscal 2027 has been unchanged in the past 30 days.The downward estimate revisions for NKE reflect more than just caution. The lowered estimates indicate persistent structural challenges that continue to weigh on near-term performance despite signs of operational progress.For fiscal 2026, the Zacks Consensus Estimate for NKE’s revenues and EPS implies 1.3% and 22.2% year-over-year declines, respectively. The consensus mark for fiscal 2027 revenues and EPS indicates 6% and 54.1% year-over-year growth, respectively.While the company is gaining traction with its "Win Now" strategy and seeing green shoots in wholesale demand and performance product sell-through, the first quarter of fiscal 2026 outlook painted a sobering picture. In the fiscal first quarter, NIKE expects revenues to decline in the mid-single digits and the gross margin to contract 350-425 bps, indicating both tariff impacts (approximately 100 bps) and continued channel adjustments. SG&A is expected to grow at a low-single-digit rate. These projections highlight that while long-term fundamentals may stabilize, near-term turbulence remains a reality.NIKE’s Valuation PictureWhile NIKE remains fundamentally strong, backed by its decisive actions to reposition itself for sustainable and profitable long-term growth, its current forward 12-month price-to-earnings (P/E) multiple of 36.75X raises concerns about whether the stock's valuation is justified. This multiple is higher than the Zacks Shoes and Retail Apparel industry average of 30.38X and the S&P 500’s average of 23.32X, making the stock appear relatively expensive.The stock's elevated valuation reflects high investor expectations for growth. However, NIKE looks increasingly vulnerable in an environment wherein market participants are growing cautious about overpriced Consumer Discretionary stocks. The Zacks Rank #3 (Hold) company’s ability to meet or exceed these lofty expectations is crucial in justifying its premium pricing. Image Source: Zacks Investment Research ConclusionNIKE’s recent rally highlights renewed investor confidence in its turnaround efforts, with the “Win Now” strategy beginning to show encouraging results across product innovation, wholesale partnerships and regional performance. However, the near-term outlook remains challenging, with revenue and margin pressures expected in early fiscal 2026, alongside cautious consensus estimates.While long-term fundamentals such as brand strength, product pipeline and expanding global presence position NIKE well for sustainable growth, its premium valuation leaves little room for disappointment. The company must demonstrate consistent execution and tangible earnings recovery to validate its elevated multiples and maintain investor enthusiasm.For now, NIKE appears to be on a gradual path toward stabilization, but the coming quarters will be critical in proving that its operational reset can translate into durable revenue growth and profitability. Investors may prefer to wait for greater visibility before turning more constructive on the stock.Better-Ranked Stocks to WatchWolverine World Wide WWW is engaged in the designing, manufacturing and distribution of a wide variety of casual, as well as active apparel and footwear. The company presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. WWW delivered a trailing four-quarter earnings surprise of 39.1%, on average. The Zacks Consensus Estimate for Wolverine’s current financial-year sales and EPS indicates growth of 6.5% and 46.2%, respectively, from the year-ago reported numbers.Ralph Lauren RL is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. It currently flaunts a Zacks Rank of 1. Ralph Lauren delivered a trailing four-quarter earnings surprise of 8.5%, on average. The Zacks Consensus Estimate for RL’s current financial-year sales and EPS indicates growth of 6% and 19.8%, respectively, from the year-ago reported numbers. Hanesbrands HBI engages in the design, manufacture, sourcing and sale of apparel essentials for men, women and children in the United States and internationally. It presently carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for HBI’s current financial-year sales indicates a decline of 11.3% from the year-ago reported number and that for EPS suggests a 65% surge. Hanesbrands delivered a trailing four-quarter average earnings surprise of 56.1%.Higher. Faster. Sooner. Buy These Stocks NowA small number of stocks are primed for a breakout, and you have a chance to get in before they take off.At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We’ve combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month.You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days.Download the report free now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIKE, Inc. (NKE): Free Stock Analysis Report Ralph Lauren Corporation (RL): Free Stock Analysis Report Hanesbrands Inc. (HBI): Free Stock Analysis Report Wolverine World Wide, Inc. (WWW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks