When thinking of the most powerful brands on the planet, Apple and Coca-Cola might immediately come to mind. I wouldn’t be surprised if Nike (NYSE: NKE) gets brought up as well.
The leader in athletic footwear and apparel has a storied history, to be sure. However, it has hit a major rough patch. The share price, which is down 39% in the past five years, reflects underlying fundamental issues with the business.
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But opportunistic investors hunting for strong returns could see a turnaround play here. Can this consumer discretionary stock double a $1,000 investment over the next five years?
Image source: Getty Images.
Nike generated $11.3 billion in revenue in the third quarter of 2025 (ended Feb. 28). That figure was down 9% year over year and also 9% lower than the same period in fiscal 2023. What’s more, earnings per share (EPS) tanked 30%. These financial metrics are wildly disappointing.
With the benefit of hindsight, it becomes very clear what mistakes Nike made to get to this point. The business relied too much on classic footwear franchises, which contributed to a lack of product innovation that drove a loss of customer excitement.
On the distribution front, Nike leaned heavily on going direct to the consumer, mainly in e-commerce, alienating retailing partners in the process. And this opened up shelf space to up-and-coming rivals, particularly in the important running category.
Fashion is a tough industry to crack. Companies have to work hard to cater to the constantly changing tastes that consumers have. For example, the rise of the athleisure trend was a boon for Lululemon Athletica while spawning new businesses like Alo Yoga and Vuori. It seems more recently, there is growing interest in looser-fitting clothes. Change is the only constant.
It is surprising, though, that Nike has taken such a big hit financially. After all, this company has been around for decades, leading the global sportswear market. It should have a better pulse on consumer trends than any business in the industry. But even the best can still run into problems.
Nike possesses one of the world’s most iconic brands. I don’t believe anyone would disagree here. This brand is precisely what makes up the company’s economic moat. It provides a key asset for Nike to focus on.
CEO Elliott Hill, who was brought in last year to orchestrate a successful turnaround, is focusing on the right strategic priorities. It’s all about getting back to product innovation and meeting customers where they are. Nike recently started selling its products on Amazon again after taking a six-year break from the dominant online marketplace.
For what it’s worth, Nike still has a leading market share in the worldwide sportswear industry. Its brand, high-visibility athlete endorsements and league partnerships, broad distribution capabilities, and marketing prowess give it the tools it needs to succeed.
Nike shares are near the cheapest they’ve been in the past decade, trading at a price-to-earnings (P/E) ratio of 20.9. Expectations are understandably low, but that introduces upside potential.
Investors must believe that Nike will get back on track sooner rather than later. And by this, I mean it starts to register solid revenue and EPS growth. Making real progress could take some time, but this is the formula for investment success.
I wouldn’t be surprised if the stock can double in five years, turning $1,000 into $2,000 by the end of the decade. A cheap starting valuation, coupled with improving fundamentals, can drive huge share-price gains. However, I still think this remains a very risky investment opportunity as the uncertainty is high.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Lululemon Athletica Inc., and Nike. The Motley Fool has a disclosure policy.
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