NEW YORK (MONEY) -- I last recommended Nike nine months ago, saying that investors were underestimating the stock's potential.

It seems, however, that they're still underestimating the stock. Since I wrote that column, Nike's share price is $2 lower. In fact, the stock has been moving sideways for almost two years.

The chief reason Nike has failed to attract more investor interest, despite an obviously cheap share price, is that the company has not been able to sustain significant earnings growth.

In the most recent quarter, reported last week, net income was actually down 5 percent. Results were hurt, in part, by a special charge for a legal settlement.

Not surprisingly, the stock price promptly dropped by several dollars. But these results obscure improving fundamentals at the company. For the full fiscal year that just ended, Nike turned in an 18 percent gain in earnings per share. Revenues grew 9 percent and net income was up 15 percent.

Stock buybacks provided a little extra boost to earnings per share. Over the past year, Nike has repurchased 9.45 million shares at a cost of more than $700 million. In June, the company approved an additional $3 billion of share repurchases over the next four years.

Going forward, Nike has acknowledged that earnings for the current fiscal quarter may also be down, compared with a year ago. Earnings shortfalls are largely the result of heavy marketing and advertising, including spending related to the World Cup. Profit margins have also been hurt by higher oil prices.

Despite these recent disappointments, Nike has remained the leading worldwide maker of athletic footwear. The industry as a whole is growing slightly faster than the U.S. economy, and Nike is projected to outpace the industry.

Order trends have been strong in the United States and China, while Europe and Japan have lagged. Analysts expect business to pick up in those softer markets by early 2007.

Over the next five years, Nike's earnings are projected to grow at a 14 percent compound annual rate. The shares also yield 1.5 percent.

While all fashion businesses are unpredictable and Nike may be six months away from showing a substantially better bottom line, the stock clearly looks cheap.

At a current $81.33 a share, Nike (Charts) trades at only 14.5 times estimated earnings for the current fiscal year. That's a price worth catching even if the stock needs another quarter or two before it gets going.

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Michael Sivy is an editor-at-large for MONEY Magazine. Sivy on Stocks runs each Tuesday at CNNMoney.com -- sign up to receive it by e-mail.