As we begin 2025, Nike NKE shares have hovered near 52-week lows while Adidas ADDYY stock is not far from its highs. Surely, investors may wonder if a sharp rebound is in store for Nike shares or if Adidas stock can reach higher highs.
This makes it a worthy conversation of which iconic shoe and retail apparel company is the better investment at the moment.
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Why NKE is Down and ADDYY is Up
Attributed to what has been a constant need to revamp its product line, Nike is dealing with increased competition outside of Adidas from the likes of Under Armour UAA and New Balance. Correlating with such, slower sales growth and inventory issues have weighed on investor confidence.
Meanwhile, Adidas has been able to capitalize on Nike’s downturn by strategically increasing its product offerings. This has led to improved financial metrics for Adidas which has bolstered market sentiment.
Outlook Comparison & EPS Revisions
Based on Zacks estimates, Nike’s total sales are expected to decline 10% in fiscal 2025 to $46.34 billion compared to $51.36 billion last year. Fiscal 2026 sales are projected to stabilize and rise 1% to $47.11 billion.
Nike’s annual earnings are currently slated to drop 47% this year to $2.10 per share versus EPS of $3.95 in 2024. That said, FY26 EPS is projected to rebound and rise 12% to $2.36. However, it’s noteworthy that FY25 and FY26 EPS estimates have continued to decline over the last quarter and are noticeably lower in the last 30 days.
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As for Adidas, its top line is expected to increase 6% as the company rounds out FY24 with total sales projected to expand another 10% in FY25 to $27.3 billion. Even better, annual earnings are now expected to climb to $2.15 per share in FY24 from an adjusted EPS loss of -$0.36 in FY23. More intriguing, FY25 EPS is forecasted to soar another 88% to $4.05.
Notably, over the last 60 days, Adidas FY24 EPS estimates are up 4% although FY25 EPS estimates are slightly down.
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Valuation Comparison
Trading at $71 a share, NKE is at a 34.3X forward earnings multiple with ADDYY at $125 but at 30.9X. Still, both trade at premiums to the benchmark S&P 500’s 22.1X and their Zacks Shoes and Retail Apparel Industry average of 14.4X.
In regards to price to sales, Adidas is more attractive as well with ADDYY under the optimum level of less than 2X while NKE is at 2.3X.
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Dividend Comparison
Nike does have a clear edge as it relates to dividends with a 2.22% annual yield that towers over Adidas’s payout of 0.19% and tops their industry average of 1.92%.
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Takeaway
Adidas stock currently lands a Zacks Rank #3 (Hold) while Nike shares are unfortunately tagged with a Zacks Rank #5 (Strong Sell) at the moment. Nike may certainly be more attractive to income investors, but the sharp decline in earnings estimate revisions does allude to more downside risk. In contrast, Adidas shareholders could still be rewarded when considering the company’s appealing growth trajectory.
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NIKE, Inc. (NKE) : Free Stock Analysis Report
Adidas AG (ADDYY) : Free Stock Analysis Report
Under Armour, Inc. (UAA) : Free Stock Analysis Report