Up 15% After Earnings, Is It Too Late to Buy Nike Stock?

Nike (NYSE: NKE) seems to always align with winners. It brought us the iconic "Bo Knows" campaign with two-sport star Bo Jackson; its association with Michael Jordan and the Air Jordan line of footwear is legendary; and it has longtime deals with tennis star Serena Williams and soccer's Cristiano Ronaldo. But the stock has been on a losing streak -- until recently.

The company released its fiscal 2025 fourth-quarter earnings on June 26 (for the quarter ended May 31). While revenue fell from the previous fiscal year -- and earnings per share dropped a full 86% -- there was enough good news in the report to spark investor interest. The stock popped big, up 15% on heavy trading volume.

So, if you didn't buy Nike stock before the earnings report, is it too late to get in the game? Or are you relegated on the bench to wait for another chance to shoot your shot?

Let's take a closer look.

Image source: Getty Images.

What's happening with Nike

Nike's stock pop wasn't about the contents of the earnings report. Instead, it's being fueled by what comes next. Nike launched a turnaround effort it calls "Win Now" that is designed to get the company back to its roots -- as a performance driven-brand that focuses on athletes.

It includes focusing on fewer products but making those products more impactful, such as its Pegasus and Vomero running shoes. Management says the company's running segment grew by high single digits in the quarter, and the Vomero 18 shoe became a $100 million franchise in just 90 days.

It's also planning to invest in Nike Digital to improve the company's presence, including websites, apps, and social media channels, and working closer with its wholesale partners such as Dick's Sporting Goods, including additional resources in retail marketing and visual merchandising.

Internally, Nike is streamlining its leadership structure. CEO Elliott Hill, a former Nike executive who took the top job in October following John Donahoe's retirement, told analysts last week on the company's earnings call that he's replaced 11 of 15 of his direct reports, and is reorganizing teams into sport-specific units.

Elliott told investors that the plan is to put athletes at the center of everything the company does.

We pulled the lever we could pull the fastest, investing heavily in big sport moments and key product launches to win back our brand voice. That energy has ignited Nike performance product with consumers which is helping to better balance our portfolio. Reclaiming our voice in sport has turned out to be the jump-start we needed for our team culture, too. I see the fight in our teams. We believe and we're competing.

All the changes were sorely needed. Nike's earnings report showed revenue of $11.1 billion, down 12%. The company's Converse brand saw a huge loss of 26% from a year ago, reporting revenue of $357 million.

Overall, net income for Nike was $200 million and earnings per share came in at $0.14, both down 86% from a year ago.

For the full year, Nike reported revenue of $46.3 billion, down 10% from the previous fiscal year. Net income was $3.2 billion and earnings per share were $2.16, down 44% and 42%, respectively, from a year ago.

Addressing the tariff issue head-on

Nike's challenges are more than just consumer wants and needs. It also has significant exposure to the trade/tariff war between Washington and Beijing. About 16% of the footwear that Nike imports into the U.S. comes from China, but those products are vulnerable to massive tariffs that both sides have threatened since President Donald Trump took office.

Nike says that it is taking steps to move production out of China, and by 2026 Nike's production there will only be in the high single digits, according to CFO Matthew Friend. Nike disclosed that it will have what it calls a "surgical price increase" in the U.S. because of the tariffs, and that the tariff war will cost Nike about $1 billion.

Nike's strategy won't eliminate its tariff threat, and it runs the risk of consumer backlash if prices go up too much. But it will help Nike mitigate the damage and protect its margins.

Is it too late to buy the stock?

Any time you see a company jump 15%, you've got to have a little FOMO -- fear of missing out. But I don't think you have that worry with Nike stock today.

First, have confidence in Nike's new leadership and the steps it's taking to course-correct the brand. It will be a long process -- particularly as the company also navigates the tariff issue -- but by taking a long-term approach, you can see there's plenty of opportunity to earn profit.

You should also take note that Nike stock is a whopping 57% off its all-time high set in 2021. I'm not going to predict that Nike will get back to that level in the near future, but if you agree that Nike's headed in the right direction, you still have plenty of time to slowly build a position with dollar-cost averaging.

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Patrick Sanders 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.