00:00 At a share price of $124, Nike stock has a market cap of $195.7 billion with $10.6 billion of cash
00:08 including short term investments and $8.9 billion of long term debt, the enterprise value is around
00:13 $194 billion. Looking at a historical chart, Nike typically trades between 20 to 30 times earnings,
00:20 so the current 35 times earnings multiple is not cheap. If we look at another historical chart,
00:25 this blue line shows Nike stock at 25 times earnings. So you can see the 25 times earnings
00:30 line has been a pretty good time to buy Nike over the last few years. To put Nike stock into
00:35 perspective, let's say the company manages to grow earnings 10% per year for the next 10 years
00:40 and it manages to increase its dividend 10% a year as well. Assume you reinvest those dividends and
00:45 then the stock trades at 30 times earnings at the end of those 10 years. That would take the share
00:50 price up to around $310 in 10 years time for an investment return of around 9.5% per year.
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