Nike's Financial Strength: What Moneyball Data Reveals

Nike (NYSE: NKE) dominates the global athletic footwear and apparel market as one of the world's most recognizable brands. Let's examine how this sportswear giant performs according to Moneyball's AI-powered analysis system.

How Moneyball Works: AI-Assisted Investment Scores

Moneyball combines artificial intelligence with expert analysis to evaluate companies across multiple dimensions. The system analyzes various metrics including financial performance, technology implementation, product strength, and leadership quality to generate objective scores that help investors make more informed decisions.

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Breaking Down Nike's Scores

Nike's Superscore of 74/100 reflects its strong market position and financial performance. Return on unleveraged net tangible assets (ROUNTA) is a metric Warren Buffett favors for measuring efficiency in generating returns from physical assets. Nike's ROUNTA of 27.4% demonstrates impressive efficiency in utilizing its physical assets to generate returns.

Nike's Moneyball Scorecard:

• Superscore: 74/100
• Financial: 84/100
• Technology: 75/100
• Product: 76/100
• Leadership: 49/100
• AI Implementation: 51/100
• Surge: 44/100
• GARP: 93/100
• ROUNTA: 27.4%

Standout Metrics and Areas for Growth

Nike's standout Financial score of 84/100 and Product score of 76/100 reflect its market dominance and branding excellence. However, the Leaders score of 49/100 highlights where the company has lagged in recent years.

The return of Elliott Hill -- a longtime Nike executive for 32 years -- as CEO in October 2024 gives room for optimism that this weak leadership score can improve as Hill executes the company's mini-turnaround of sorts in the quarters ahead. Whether Hill can successfully navigate Nike's resurgence will be key for investors.

Looking to the Future

Nike's Technology score of 75/100 and AI Implementation score of 51/100 indicate the company is maintaining competitive technological capabilities while having opportunities to further enhance its AI integration.

Despite its operational stumbles over the past several years, Nike is still a cash machine -- generating more than $5.5 billion in free cash flow annually and with $739 million in net cash on the balance sheet. This gives the company a war chest to invest in its tech and AI capabilities to bolster its brand and competitive advantage.

What These Scores Mean for Investors

Nike's strong financial metrics and product scores represent solid fundamentals, while the high GARP (growth at a reasonable price) score of 93/100 suggests the stock may be attractively valued relative to its growth prospects. Nike shares trade at a free cash flow yield of 4.8% -- a historically attractive valuation for the stock.

Given these factors and Nike's relatively strong Moneyball scores, I believe the stock is well positioned to outperform the S&P 500 over the next five years.

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David Kretzmann has positions in Nike. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.