Nike, Inc. J.D.’s Favorites
The report summary gives a clear synopsis of the case that Ms. Ford is interested in calculating the cost of capital for Nike, Inc. in order to determine whether Nike share price of $42.09 is overvalued or undervalued. The report justifies the use of a single cost of capital instead of using multiple cost of capital for the different business units of Nike, Inc. by pointing out that Nike earns 95.6% of their revenue from shoes and related items. The calculations and the assumptions made easy to follow. However, the report does not make a conclusion on whether Nike shares are overvalued or undervalued. Another shortcoming of the report is that it does not make a recommendation on whether Ms. Ford should buy the shares.
The presentation is good and the calculations and assumptions explained clearly.
Nike Case the Last Lap
The report summary gives a brief overview of the case indicating that the dramatic decline in the share price of Nike to be the reason prompting Ms. Ford to determine the cost of capital in order to decide whether to buy the company stock. The summary does not provide any factual data such as percentage decline or the current share price. The report makes a contradictory argument on whether to use a single or multiple cost of capital. The calculations on cost of debt are difficult to follow because at first, the report uses the bond YTM as the cost of debt, but for 2016, the report uses the industry average cost of debt. The report does not make a recommendation on whether Ms. Ford should buy Nike shares.
The presentation was fair, but the calculations are hard to follow.
