Nike's (NYSE: NKE) stock has been flat over the past year, as sales growth has been lower than investors expect, especially given that Nike was valued at a high price-to-earnings (P/E) ratio of 30 in early 2016. High valuations demand high growth, and when growth disappoints, stock prices usually suffer the consequences.
Meanwhile, Adidas (NASDAQOTH: ADDYY) has been invading Nike's territory in North America with renewed energy, posting robust sales growth over 20% compared to Nike's paltry single-digit sales growth. However, I don't believe this is the time to throw in the towel on Nike, which has one of the most iconic brands in the world. Both companies operate in a huge athletic apparel market that generates about $300 billion in annual sales, and there's good reason to expect Nike to bounce back.
IMAGE SOURCE: NIKE INC.
Source: Fool.com