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Investors are not fond of Nike (NYSE: NKE) right now. That's highlighted by the over 70% decline in the stock from its 2021 high. The problems are real, with the company's sales and earnings both trending in the wrong direction. However, there are signs that a turnaround effort, dubbed "Win Now," could be having a positive impact.

Nike is facing some negative headwinds it can't control. For example, tariffs increase its costs, and so do high oil prices. However, it is also dealing with some self-inflicted wounds, too. For example, Nike upset other shoe retailers when it started to focus more on its own retail operations. And there was a period when the company's product innovations didn't resonate with shoe customers.

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Even the company's most recent quarter wasn't all that great. Fiscal third quarter 2026 sales were flat year over year, and margins declined. CEO Elliott Hill admitted that "The work is not finished." By work, the CEO means the effort to turn Nike's business around. But there were glimmers of hope.

For example, shoe sales in the U.S. market rose 6% year over year. The United States is Nike's largest market, and progress here could be an early sign that the "Win Now" plan is gaining traction. Meanwhile, upfront costs associated with cost-cutting efforts were a headwind to margins, suggesting future quarters could see margin recovery.

It is too soon to suggest that Nike is out of the woods. But the risk-versus-reward balance looks attractive. For example, the stock has a well above market 3.5% yield and, despite the headwinds of recent years, continues to extend its long streak of annual dividend increases. The yield, meanwhile, is near the highest levels in the company's history.

The price-to-earnings ratio is in line with its five-year average of 30x, largely due to the earnings impact of the troubles Nike is facing. However, the price-to-sales and price-to-book ratios are both 50% below their five-year averages, suggesting the stock is historically cheap. Those two ratios look at financial metrics that tend to be more consistent over time than earnings, which are highly volatile. Given the deep price decline and early signs of success in the key U.S. market, it seems likely that there's more upside opportunity than downside risk.

Turning a giant business like Nike around isn't easy. However, the company appears to be making early progress in that effort. If you believe that management can live up to its own "just do it" slogan, the downtrodden stock looks attractively priced right now. Just go in knowing that the turnaround could take a bit longer to play out. Of course, the lofty dividend will pay you well to wait if it does.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.

Nike Looks Cheap, But You Have to Believe the Shoemaker can "Just Do It" was originally published by The Motley Fool