Nike’s position in the Dow Jones Industrial Average is under scrutiny after S&P Dow Jones Indices confirmed that the company will be removed from the S&P 100 before trading opens on September 21. The S&P 100 is a narrower benchmark made up of about 100 of the largest companies in the S&P 500.

The index provider cited Nike’s market value, which has fallen roughly 80% over the past five years to about $53 billion. The decision has prompted questions about whether Nike could also be removed from the Dow before the end of the year. Index changes draw attention because funds that track a benchmark adjust their holdings to match its composition.

Nike (NKE) is trading at around $36, making it the lowest-priced and lowest-weighted stock among the Dow’s 30 components. Because the Dow is price-weighted, stocks with lower share prices have less influence on the index. Nike accounts for only 0.4% of the Dow’s overall weighting, while Coca-Cola is the second-smallest component at about 1%, with its stock trading near $88.

Goldman Sachs, the Dow’s highest-weighted stock, trades at around $968—approximately 27 times Nike’s share price. The gap between component prices is among the factors monitored by the Dow’s Averages Committee.

Nike has been a Dow member since 2013. During that period, the stock has gained only about 5%, while the S&P 500 has more than quadrupled.

The Dow has no automatic deletion rules. Changes are made on an “as-needed basis” by the Averages Committee, which consists of three representatives from S&P Dow Jones Indices and two from The Wall Street Journal. The committee’s discussions are confidential. Under the index provider’s published methodology for the average, additions are expected to have an excellent reputation, sustained growth, and broad investor interest, with sector balance among the committee’s considerations.

However, a Reuters analysis of the 10 Dow changes made since 2013 found that at least half involved removing the stock with the smallest weighting at the time.

“Just looking at it historically, it probably is a candidate for removal,” said Josh Bischoff, partner and head trader at TimesSquare Capital Management.

Bearish Earnings Outlook

Nike’s outlook is also facing pressure ahead of its October 1 earnings report. According to FactSet, 26 analysts covering the company rate the stock a Hold, while five rate it a Sell and 12 rate it a Buy.

UBS analyst Jay Sole wrote this week that Nike’s global sales growth trend has “deteriorated over the last 3 months.” He expects the company’s results to miss consensus estimates and its second-quarter outlook to come in well below current expectations.

“Sentiment is bearish, yet our conversations with investors suggest the market underestimates the magnitude the downward EPS revisions,” Sole wrote.

Analysts expect year-over-year sales to decline both in the current quarter and in the fiscal quarter ending in November. The October 1 report falls just over a week after the September 21 index change, placing it inside the year-end window in which a Dow decision, if the committee acts, would occur.

Broader Sneaker-Sector Pressure

Nike is not the only athletic footwear company facing weakness. Adidas is down more than 15% this year, while Deckers Outdoor, the owner of HOKA, has fallen 25%. On Holding has declined nearly 45%.

Weak earnings from Dick’s Sporting Goods, which also owns Foot Locker, have highlighted difficult conditions across the sneaker retail sector.

Nike’s dividend yield is 4.6%, the highest in the Dow. That feature may appeal to income-focused investors, although it does not determine the company’s continued inclusion in the index.

CEO Elliott Hill, who rejoined Nike in 2024 to lead a turnaround, said during a June earnings call that the company was navigating a “more complex macro environment” amid increased pressure on consumer spending.

Nike declined to comment on the possibility of being removed from the Dow.

Source: CoinCentral