n Thursday, March 20, after the stock market closed, Nike reported yet another huge quarter: revenue up more than 50%; net income well above analysts' expectations; management euphoric enough to skip the usual cautionary comments. So what happened the next day? Nike stock fell $2 a share.

That's the way it's been for Nike over the past 22 months: Good news seems not to matter, and any hint of trouble drives the stock down. Company pitchman Tiger Woods wins the Masters? Shortly thereafter Hambrecht & Quist cuts its rating on Nike and the stock falls again. Even as the overall market turned upward recently, Nike's shares have continued to suffer--off some 30% from their mid-February peak.

The turn in sentiment against Nike began with rumors of a slowdown in demand, but gained momentum because of the herdlike fickleness of Wall Street analysts. When Nike's stock was at its peak price/earnings ratio just months ago, the majority of analysts called it an unqualified buy, according to First Call (a service that tracks analysts' picks). But now, as it slips lower and lower, more and more of them are turning coat, so that analysts as a group rate Nike merely a market performer. That raises the obvious question: Is this the perfect buying opportunity?

The crack in Nike's share price began when a rumor surfaced in an industry trade publication that Foot Locker, one of the leading athletic shoe retailers, was canceling a big order from Nike. Foot Locker's parent, Woolworth, denied the rumor, but the damage was done. Then, Smith Barney analyst Faye Landes returned from a trip to Nike's factories in the Far East and reported that the company was cutting back output forecasts for the key summer months. Nike countered that it often books "excess" production capacity and that such cuts are not unusual, but Landes nevertheless downgraded the stock from buy to hold. Soon after, Footstar, another specialty retailer, warned of softening sales for its athletic footwear.

Troubling news, to be sure. Still, the same Wall Street analysts who are turning against the stock are projecting long-term earnings growth of 20% to 25% annually. Even at its peak, the stock sold at less than 24 times this year's projected earnings. Today, the P/E is only 17.

Why is the stock selling at such a discount to growth, rather than commanding a premium on par with big-brand growth companies like Microsoft, Coca-Cola, or Gillette? The reason is that Wall Street views Nike not as a classic growth stock but as another apparel company, dependent on the caprices of fashion. In other words, what happens if Nike's ubiquitous "swoosh" logo suddenly becomes unhip?

It's an ungenerous perspective for a company with Nike's superb management and commanding market position. Next year the company will likely generate over $4 billion in revenue from U.S. footwear sales alone--twice as much as two years ago. Total revenues increased 36% in fiscal 1996--and 55% and 53%, respectively, in the most recent two quarters. Even though investors slammed Nike's stock because of the "possibility" of slower U.S. footwear growth, Nike is increasingly diversified, with revenue from overseas sneaker sales, and yes, apparel sales. In fiscal 1995, U.S. footwear sales were half Nike's total revenue; this year that percentage will drop to about 40%. By 2000 the figure will be closer to 30%, according to Robertson Stephens analyst Lauren Cooks Levitan. And as John Horan, publisher of Sporting Goods Intelligence, notes: "Sneakers are consumer nondurable items. They are disposable, so it's not like washing machines or cars, where sales move in cycles."

Not that the stock is an unreserved buy right now. It will be difficult for Nike to duplicate the explosive growth of the past few years--which was due, at least in part, to publicity from last summer's Olympic games. Though some slowdown should be expected (and may indeed be beginning), it could also prompt yet more hand-wringing on Wall Street and bump the stock down again. Even though, in the long-term, Nike shares are far more likely to be north of where they are today than south, investors who shun volatility might be better off waiting until the stock--and the Street--becomes more sanguine. On the other hand, if you're buying for the long run and don't want to worry about timing the next rise, Nike's stock does seem to have limited downside at this level.

So are there other sneaker makers that have been unfairly pilloried by Wall Street? You might think so after taking a look at Reebok's stock chart: It closely tracks Nike's this year, both in the rise and the fall. But given Nike's dominance in the industry, portfolio managers like Marian Kessler of the Crabbe Huson Equity fund tend to find Reebok attractive only when it trades at a significant discount to Nike. With the stock now around $37, Reebok, at about 15 times projected earnings, is only slightly below Nike.

The other sneaker maker with upside appeal is Adidas, the German company that ruled the market back in the 1970s but has eaten Nike's and Reebok's dust ever since. After reporting huge losses just five years ago, Adidas has staged a remarkable turnaround under new management. The company still dominates the vast soccer market, and the brand has also become trendy of late, especially among Gen Xers. Says Horan: "In some ways Nike is more concerned with Adidas than they are with Reebok." The one problem is that you can't buy the stock in the U.S. yet. Adidas is adopting U.S. accounting standards (rumor has it that it may list shares here later this year), but in the meantime, the best Adidas play is via an overseas mutual fund. The New Germany fund, managed by Hanspeter Ackermann, owns a big Adidas stake--9% of total assets--and trades on the New York Stock Exchange. Says Ackermann: "Adidas clearly has the upper hand in Europe, and they have been underpricing Nike here in the U.S."