A post for Nike investors.

This is not a post to buy or sell but perhaps a post to share among Nike investors, and maybe help me do some additional due diligence. I did up a chart to try to spot the bottom of the business cycle using Capex/D&A , Inventory to Sales and also to see if P/E and P/CF work against each other. this is what i wrote: =================== The purpose of this post is to analyse the company's performance with other metrics. We know that the company beat guidance but the stock fell badly as the expectation was for the company to turnaround this year. And it looks like the issues in China are not getting better and management is guiding a drop of 20% from the business in China next quarter. On the flipside, Europe and USA is showing some growth. As the CEO has said, not all growth is linear. Here are four metrics that i want to analyse the company from. These were mentioned by the investors in their books on spotting cyclical bottoms. I thought that may be it could be used to spot the turnaround of Nike inc. (a) Capex/Depreciation & Amortisation The thesis is that a company will invest in new plants and equipment when they see their business prospects going up. And conversely, they will cut back on new purchases to conserve cash if they see the business deteriorating. Traditionally if the ratio is >1 they are spending more (a bullish sign) and if the ratio is <1 it means they are cutting back. However, in my opinion, the change of direction denotes tops and bottoms and this is significant. If you look at the green line on the 2nd Panel, this captures what has been happening in Nike. From 2023 to early 2025, their capex/D&A had been dropping as the company cut back on investments. Somewhere in 1Q or 2Q 2025 the ratio hit bottom and then it started to change direction like a "V" sign and now the ratio is increasing, it is still <1 but directionally it is significant. Nike has started to invest more because it thinks the business climate is going to improve. (b) Inventory to Sales ratio The thesis is that at the peak of the ratio, there is too much inventory and sales hasn't risen to absorb the inventory. This is at the peak of pessimism. If you see the third panel and align it to the price chart, you will see that in late 2021 early 2022, the Inventory started to pile up as the sales could not catch up. And investors started to sell the stock. This peaked in mid to late 2022 and then it fell. In 2025, an inverted V formed again, this time, it was due to the planned replenishment of inventory, and it has started to go down again as sale picked up. The last 2 metrics P/E and P/CF were made to detect the presence of a "High P/E" for an undervalued stock. Peter Lynch wrote that for some cyclical companies, the "E"arnings can shrink faster than the "P"rice, resulting in a High P/E for a undervalued Stock. The fourth panel shows this, where the ratio is quite high, at 40 (currently it has dropped to a P/E of 28, not as high but still high) even as the share price is at an all time low. ( Nike is not a cyclical stock in the traditional sense but more of a consumer discretionary stock). However, if you look at the Price /Cash Flow ( P/CF, not P/FCF), you will see that by p/cf the is still undervalued. This can be explained by perhaps a reduction of Capex, or that the cashflow is still intact even while earnings shrink. Anyway. I am still learning and reading and experimenting on this. One thing to take note of is the time lag in the ratios. I am of the opinion that Capex/DA tend to lag on cycle tops because factories / equipment once started becomes harder to shut down. Although the reverse may not be true. just sharing this. ==================== the picture is on my reddit page, which i will provide the link in the comments.