adidas (XTRA:ADS) Valuation in Focus After Q3 2025 Earnings Growth Spurs Investor Interest

adidas (XTRA:ADS) released its third quarter 2025 earnings, revealing year-over-year increases in both sales and net income. Investors are watching these numbers for signs of continued momentum as the company moves through the rest of the year.

See our latest analysis for adidas.

Despite adidas delivering solid growth in both sales and net income this quarter, the stock’s recent momentum has faltered, with a 1-week share price return of -12.6% and a year-to-date share price decline of 30.8%. While the news may spark renewed interest, long-term total shareholder return remains positive over three years but is still well below its five-year high. This highlights that sentiment has shifted even as fundamentals improve.

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With shares down sharply this year despite double-digit earnings growth, the question for investors is whether adidas is unappreciated at current prices or if the market has already factored in future performance.

Most Popular Narrative: 30% Undervalued

adidas’s fair value, according to the most widely followed narrative, stands well above the recent closing share price, creating a compelling gap for investors. This perspective hinges on how key profit drivers and industry shifts could propel earnings further.

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.

Want to uncover the reasoning behind the valuation jump? The foundation rests on bold profit expansions, accelerating top-line growth, and a margin story that has caught analysts’ attention. Find out what critical assumptions make or break this outlook. One number could change everything.

Result: Fair Value of $234.05 (UNDERVALUED)

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

However, heightened U.S. tariffs and fierce competition could pressure adidas’s margins and slow growth, creating uncertainty around how undervalued shares truly are.

Find out about the key risks to this adidas narrative.

Another View: Market Multiples Challenge

Looking from a different angle, adidas trades at a price-to-earnings ratio of 24.2x, which is well above the European Luxury industry average of 20.6x and its own fair ratio of 21.6x. This means investors are paying a premium compared to peers, raising questions about potential value risk if momentum fades. Could this premium be justified, or is caution sensible here?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own adidas Narrative

If you see the story differently or want to dive deeper into the numbers yourself, you can build your own adidas case in just minutes. 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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