Shares of shoe and athletic apparel company Nike (NKE -0.25%) gained 11.3% during August, according to data provided by S&P Global Market Intelligence. For most of the month, the stock bounced up and down with the S&P 500. But it created some separation when news broke that Pershing Square had purchased a stake in the business.

Pershing Square is the hedge fund for billionaire Bill Ackman — a value-minded investor with plenty of name recognition. Therefore, when Ackman buys shares of a company, it tells investors that it’s an undervalued opportunity.

On Aug. 14, Pershing Square’s paperwork showed that it had a $229 million position in Nike stock. On one hand, that’s the smallest position in its portfolio. On the other hand, Ackman’s hedge fund is only invested in eight companies, so any position is important, regardless of its size.

Is Nike stock really a good value?

Nike stock currently trades at about 22 times its earnings. And prior to the news from Pershing Square, it traded below 20 times its earnings. Investors would have to go back to 2012 to find a time that Nike stock had been this cheap.

NKE PE Ratio data by YCharts.

Granted, there’s far more to value investing than this. Yes, Nike stock might not have looked this cheap in over a decade. But unless it creates shareholder value from here, its relatively cheap price tag doesn’t really matter.

In Nike’s case, it’s generated over $51 billion in revenue over the last 12 months. I’d say it’s still a pretty relevant, global business. Moreover, it’s still profitable, so it’s not necessarily destroying shareholder value. Therefore, this is a solid value-stock idea. But growth is slow, and there are headwinds. So for this to ultimately be a lucrative investment for Ackman long term, Nike does need to fix some things with the business.

What’s going on with Nike?

Sales modestly dropped for Nike in its most recent quarter. And management says that investors shouldn’t expect too much in the coming year because it’s a time of “transition.” It’s working on exciting consumers with some updated inventory to boost sales growth. But until that happens, its profits could take a hit.

 Nike stock is cheaper relative to where it normally trades, but it’s not necessarily cheap on an absolute basis — there are plenty of value stocks in a similar position to Nike at a cheaper valuation. That being the case, I wouldn’t buy Nike stock unless I was more sure that it has the right turnaround plan in place.

For its part, Nike will report financial results again on Oct. 1. That will give investors a better glimpse of recent business trends as management makes adjustments. If trends are more positive, I’d be more comfortable joining Ackman in Nike stock.