Nike stock Valuation

Topics: Sichuan, Chengdu, Finance Pages: 8 (354 words) Published: September 5, 2014
SCHOOL OF FINANCE
SOUTHWESTERN UNIVERSITY OF FINANCE AND ECONOMICS

CHENGDU, SICHUAN, CHINA PR

NIKE,INC. ANALYSIS REPORT

An academic written sample from Liu Yijun
In support of applying MSc Finance
at Manchester University

Note: This is a short version only covered what was performed by Liu Yijun, including brief introduction, the calculation of FCF, WACC, sensitivity analysis and word typesetting

In partial fulfillment of the requirements for the course
Equity Investment
January, 2013

1 January 2013|Equity Investment|NIKE Inc Financial Report

Recommendation

BUY

Price at 9 Jan 2013 (USD):
$52.45
Price Target: $63.17
52 Week Range: $50.99–
$111.81

Summary

Section4 –
Valuation
Reasons about using
FCF analysis

Computing FCFF from
Net Income and CFO &
Computing FCFE from
FCFF

Report Introduction
Nike is the largest footwear company in the world selling
footwear, apparel, equipment through 25,000 retailers. As a
stable, yet fast growing company, Nike is facing several
obstacles in its core section. In this report, we have done
thorough business analyses using Porter’s Five Force and
SWOT approach to get the fundamentals of market condition
where Nike stands. In the second step, we finished the
estimation of the investment value and risk of Nike by FCF, PE Ratio and RIM. Finally, we give the recommendation of buy on Nike’s share and the target price is $63.17.
Note: All the calculation formula and processes are listed in the Appendix.
The company’s dividends policies are not stable every year, sometimes Nike does not pay any dividends. In some years the company pays dividends but the dividends paid differ
significantly from the company’s capacity to pay dividends. Moreover, FCF align with profitability within a reasonable
forecast period with which the analyst is comfortable. Last, the investor takes a control perspective in Nike company as well as there was an M&A in year 20008.
Under the circumstances like this, we consider FCF models to be more useful than DDM in practice.
Assumption:
 There is no preferred stock in Nike.
 Depreciation is not the only NCC.

1 January 2013|Equity Investment|NIKE Inc Financial Report

FCFF and FCFE of Nike from year 2007 to 2012 Quarterly

Compare FCFF and
FCFE

FCFE is almost the same with FCFF.
In general cases, FCFE
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