A Look at adidas (XTRA:ADS) Valuation Following Latest Earnings Growth and Share Price Pullback

adidas (XTRA:ADS) shares have caught the attention of investors after the sportswear company posted annual revenue growth of 7% and net income growth of 21%. These results reflect ongoing efforts to regain momentum in a competitive market.

See our latest analysis for adidas.

Despite strong financials, adidas shares have faced a challenging year with the stock currently trading at $187.4 and a year-to-date share price return of -20.83%. While long-term sentiment is notably brighter, as shown by an impressive 3-year total shareholder return of 91.75%, recent price action suggests momentum is still rebuilding following last year’s rough patch.

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With shares having retreated despite solid earnings growth, is the current price reflecting unrealized value? Or is the market already factoring in adidas’s future recovery, leaving little room for further upside?

Most Popular Narrative: 21% Undervalued

adidas is currently valued well below what the most widely tracked narrative considers its fair worth, with last close at €187.4 compared to a substantial fair value estimate. The difference points to high future expectations and confidence in the company’s comeback story.

The ongoing shift to direct-to-consumer e-commerce and retail channels (+9% e-commerce, +9% brick & mortar, continued D2C expansion) is improving adidas' control over branding, driving higher-margin sales, and strengthening customer data utilization. This will gradually enhance net and gross margins as the channel mix evolves.

Read the complete narrative.

How does the narrative justify such a strong upside? It bets big on a new sales mix, future profit margins, and bold margin expansion rarely seen in retail. Hungry for the inside figures and growth levers that give this rally legs? Uncover which assumptions drive the story and whether this optimism stands up to scrutiny.

Result: Fair Value of €237 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost headwinds from tariffs and fierce competition from global rivals could threaten adidas’s ambitious margin and growth projections in the coming years.

Find out about the key risks to this adidas narrative.

Build Your Own adidas Narrative

Prefer to dive into the numbers and craft your own take? Put the narrative to the test by assembling your analysis in just minutes with Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding adidas.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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