Nike (NKE): what the Q4 beat really hides
2026-07-01 · By Lubin Danilo, founder of Lubin Investment
On June 30, 2026, Nike reported earnings per share of 0.72 dollars, above expectations. But 0.52 dollars came from a one-off tariff refund: real operating earnings were only 0.20 dollars. Revenue is still declining, especially in China, and the cash generated stays weak. My method remains cautious.
The quarter figures, and the headline trap
On June 30, 2026, after the close, Nike reported the fourth quarter of fiscal 2026. Revenue came in at 11.0 billion dollars, slightly down (minus 1% reported, minus 4% currency-neutral), but just above expectations. Reported earnings per share hit 0.72 dollars, when consensus expected 0.13. On paper, a blowout. Except that number is misleading.
Of that 0.72 dollars, about 0.52 came from a one-off item: an expected refund of US tariffs (the IEEPA framework) of nearly 986 million dollars, which lifted gross margin by roughly 9 points, to 49.2%. Strip that effect out and operating earnings fall to 0.20 dollars. That is the real level of activity. A tax refund is not cash earned by selling shoes: it will not happen every quarter.
Why my method does not get carried away
My method does not judge accounting profit, it judges cash. The question I ask is simple: how much free cash flow (the cash truly left once every bill and investment is paid) does the company generate, and how fast is that cash growing? On that ground, Nike scores low in my framework: 3 out of 10.
The reasons are clear. The free cash flow margin has fallen to around 1%, cash per share is dropping about 12% per year over five years, and revenue is nearly flat over the same period. When a company barely converts its growth into cash, my grid penalizes it, whatever the headlines say about profit. Accounting profit and real cash are two different things, and it is cash that pays dividends, buybacks and debt.
A word on a figure that may surprise: Nike's P/FCF (price relative to annual cash) comes out at an extreme level, above 180. Not because the stock is expensive in absolute terms, but because the cash generated over the last twelve months has collapsed: when the denominator becomes tiny, the ratio explodes. The message is simple: right now, the cash is not there.
China, the real underlying problem
The most worrying part of the quarter is not profit, it is China. Greater China sales dropped 12%, to 1.30 billion dollars. This is not a one-off: local brands like Anta and Li-Ning are gaining ground, Nike's brand heat has cooled, and the group is cleaning up its inventory and distribution channels as part of the turnaround its management launched. These things take time.
| Metric | Q4 FY2026 | Reading |
|---|---|---|
| Revenue | $11.0B (-1%) | slight beat, but declining |
| Reported earnings per share | $0.72 | inflated by a one-off item |
| Operating earnings per share | $0.20 | the real level of activity |
| Greater China | $1.30B (-12%) | persistent weakness |
| Gross margin | 49.2% | boosted by the tariff refund |
Quality versus price: my verdict
Nike stock has lost about half its value in a year and trades near its twelve-month low, around 41 dollars. The temptation to say it has gotten cheap is strong. But I always separate two questions: is this a good business, and is this the right price? Here, quality is weak today (3 out of 10), because the cash machine is jammed. A low price on a company that barely generates cash is not a bargain: it is a trap until the cash comes back.
This does not mean Nike will never rebound. The brand remains iconic, the balance sheet holds, and a successful turnaround would change the picture. But my method waits for proof in the cash, not promises. Before these results, I set out the expectations at lubin-investment.com/blog/nike-nke-avant-resultats-q4-fy2026-analyse-fondamentale, and the idea that accounting profit can mislead is detailed at lubin-investment.com/blog/pe-vs-pfcf-pourquoi-ratio-benefices-trompe-methode-lubin. The full, up-to-date Nike analysis is at lubin-investment.com/analyse/NKE.
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, fundamental analysis is my passion and has delivered excellent results. I have now beaten the S&P 500 for three years running. I built this site to analyze every stock with my own method, quickly and without relying on incomplete tools.
FAQ
Did Nike beat expectations in fiscal Q4 2026?
On paper, yes: reported earnings per share (0.72 dollars) and revenue (11.0 billion) both topped consensus. But most of the beat came from a one-off tariff refund. Operating earnings, excluding that effect, were only 0.20 dollars.
Why is Nike's reported profit misleading?
Because of the 0.72 dollars of earnings per share, about 0.52 came from an expected US tariff refund (nearly 986 million dollars), a one-off, non-recurring item. That is not cash earned by selling products. Real operating earnings were 0.20 dollars.
Why does Nike score low in your method?
Because my method judges cash, not accounting profit. Nike's free cash flow margin has fallen to around 1%, cash per share is down about 12% per year over five years, and sales are flat. A company that no longer turns growth into cash gets a low score: 3 out of 10.
What is happening with Nike in China?
Greater China sales fell 12% in the quarter, to 1.30 billion dollars. Local brands (Anta, Li-Ning) are gaining share, Nike's appeal has cooled, and the group is cleaning up inventory and distribution. Turning that market around will take time.
Should you buy Nike stock after these results?
This is not investment advice. The stock looks cheap, near its twelve-month low, but quality is weak today (3 out of 10) because cash has collapsed. A low price on a jammed cash machine is not a bargain. Do your own research.
Voir l'analyse NKE sur Lubin Investment
About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).