The chance to buy shares in quality companies at a 75% discount doesn’t come around every day. But that’s where Nike (NYSE:NKE) is right now.

The stock’s at some of its lowest multiples in a decade and insiders are buying. The question however, is what’s going to turn it around? 

Why’s the stock down?

Nike shares are down because the business has been losing ground to rivals. And it’s largely been the company’s own fault. Under its previous CEO, the firm focused on distribution instead of making better trainers. But this plan backfired.

Sales fell from $51.36bn in 2024 to $46.52bn in the last 12 months. As a result, the stock’s now 75% off its highs. 

A change in leadership’s brought in Elliott Hill – a long-term Nike executive. And the firm’s now shifting back to its previous strategy. It’s taking time. But in terms of valuation, the stock looks like a once-in-a-decade opportunity.

Valuation: record low multiples

Nike shares currently trade at a price-to-earnings (P/E) ratio of 29.4. That’s well above the S&P 500 average, but there’s a catch. The P/E multiple’s based on some very low recent earnings. On a price-to-book (P/B) basis, the stock looks historically cheap.

The current multiple’s 4.7. That’s level with the S&P 500, but a 10-year low for the company. This might be a better metric. If the downturn in Nike’s earnings is temporary, the firm’s book value is a much more stable metric.

I think they might be. The firm’s latest update suggests it isn’t out of the woods yet, but I’m not the only one seeing positive signs.

Insider buying

It hasn’t gone unnoticed that company insiders have been buying Nike shares. They include Hill and former Apple CEO Tim Cook. Both invested just over $1m with the stock at around $42.50. But investors shouldn’t read too much into these. The transactions were scheduled well in advance. So they don’t tell us anything about what the buyers think about the price at the time.

They do however, tell us that two key individuals were happy to buy more shares with their own money. And that’s a positive sign. By itself, that’s not a reason for investors to follow. But I think there are encouraging signs hiding in the firm’s latest update.

Positive signs?

Nike’s latest update reported flat sales and earnings per share down 35%. Nothing exciting there. There are several signs that progress is slow. But something in the report caught my attention in a positive way.

Hill’s trying to win back lost market share with a sport-focused strategy. And the Running category provided a strong sign. Sales in this division were up 20%. That’s a terrific result, which suggests to me that Nike’s strategy is the right one.

There’s a long way to go with categories like (what they call) Soccer. But I see this as a sign the firm can recover its lost ground.

Is now the time?

Nike’s been going backwards. But I think I’m starting to see positive signs. It’s not going to get back to 2024’s profit levels any time soon, but it’s starting to win back market share. So I’m looking at adding the stock to my Buy list.