Dear Nike Stock Fans, Mark Your Calendars for September 21

The era of Nike (NKE) in the S&P 100 will come to its end on Sept. 21. After being in the index for nearly 18 years, Nike will give up its place to Palo Alto Networks (PANW) as a result of the quarterly rebalancing of the index. The changes will take effect before the market opening on that day.

Despite the removal from the S&P 100, the sportswear manufacturer will still be included in the wider S&P 500 Index ($SPX). However, it could be considered symbolic, as the stock lost approximately half of its market value during the last year owing to poor digital performance, issues in China, and a complicated turnaround. At the same time, all the four newly added S&P 100 stocks belong to the technology industry.

Based in Beaverton, Oregon, Nike designs and distributes athletic footwear, apparel, equipment, and accessories under such brands as Nike, Jordan, and Converse. Being one of the market leaders in the consumer growth stories, Nike now has a market cap of about $55 billion.

The decline in the value of the company's shares has been quite significant. At around $37, NKE is trading just above its 52-week low of $36.98 and more than 51% below its 52-week high of $76.97. During the past 52 weeks, the stock has lost about half of its value, seriously underperforming the market.

The reduced share price certainly has affected the valuation of Nike; however, the stock is not necessarily cheap. NKE stock trades at about 22x forward price-to-earnings (P/E) and 1.2x sales. That forward P/E ratio demands the investors to pay the premium for the recovery while Nike Direct revenue decreases and earning growth becomes questionable. In other words, most of the old valuation premium has gone away, but the execution now matters more.

There is one increasingly attractive aspect—income. The annualized dividend of $1.64 per share corresponds to the forward yield of about 4.3% based on the current share price. The most recent declared quarterly dividend was $0.41 per share.

Nike Beats on Earnings, but the Turnaround Is Still a Work in Progress

Nike managed to beat the estimates in its fiscal fourth-quarter results. The adjusted earnings per share came in at $0.20 versus the estimated $0.11, while revenue of about $11.0 billion exceeded the expectations of $10.85 billion. However, the revenue still decreased 1% year-over-year on the reported level and 4% on a currency-neutral basis.