Is adidas Stock Mispriced After 2024 Slump and Strategy Refocus?

• Wondering if adidas at €167.05 is a bargain in disguise or a value trap hiding behind a famous brand? This article is going to unpack what the current share price really implies.
• Despite being down 29.4% year to date and 28.6% over the last year, the stock has bounced 1.7% in the past week and 8.5% over the past month. This hints that sentiment around its 35.7% three year gain might be turning again.
• Recent headlines have focused on adidas refocusing its brand strategy, pushing performance footwear and lifestyle collaborations, and tightening its product portfolio after a difficult few years. At the same time, the company has been emphasizing operational efficiency and inventory discipline. All of this helps explain why some investors are starting to revisit the stock.
• On our framework it scores a 4/6 valuation check. This suggests it screens as undervalued on most but not all metrics. Next we will walk through those approaches, with an even more holistic way to think about valuation waiting at the end of the article.

adidas delivered -28.6% returns over the last year. See how this stacks up to the rest of the Luxury industry.

Approach 1: adidas Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and discounting them back into today’s euros. For adidas, the model starts from last twelve month free cash flow of about €364 Million and uses analyst forecasts plus longer term extrapolations to map how that cash flow could grow over time.

Analysts expect free cash flow to rise into the low single digit billions of euros over the next decade, with projections reaching roughly €3.0 Billion by 2029, before growth gradually tapers in the second stage of the model. Simply Wall St uses a 2 Stage Free Cash Flow to Equity approach to reflect a faster growth phase followed by a more mature period.

Putting those cash flows together, the DCF model arrives at an intrinsic value of about €277 per share. Compared with the current share price of roughly €167, this implies the stock is around 39.8% undervalued on this basis, indicating that the market may not be fully pricing in adidas cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests adidas is undervalued by 39.8%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for adidas.

Approach 2: adidas Price vs Earnings

For a consistently profitable brand like adidas, the price to earnings (PE) ratio is a useful way to see how much investors are willing to pay for each euro of current earnings. A higher PE usually reflects stronger growth expectations or lower perceived risk, while a lower PE can signal slower growth, higher uncertainty, or simply a bargain.

adidas currently trades on a PE of about 24.6x, which is above the Luxury industry average of roughly 17.4x but below the broader peer group average near 32.6x. On the surface this suggests the market is pricing adidas more richly than the typical luxury name, yet not as aggressively as some faster growing peers.

Simply Wall St also calculates a Fair Ratio of 22.4x, a proprietary PE estimate based on adidas earnings growth outlook, profitability, industry, market cap and specific risk profile. This is more tailored than a simple peer or industry comparison because it adjusts for adidas own fundamentals rather than assuming it should trade like an average company. With the current 24.6x PE sitting modestly above the 22.4x Fair Ratio, the shares look slightly expensive on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1456 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your adidas Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of adidas business story with a concrete forecast for its future revenue, earnings and margins, and then into a Fair Value that you can compare to today’s share price. On Simply Wall St’s Community page, used by millions of investors, a Narrative is your personalised storyline for the company, where you state what you think will drive growth or pressure margins, and the platform automatically translates that story into numbers and an implied Fair Value so you can decide how you want to categorize the stock. These Narratives update dynamically as new information, such as earnings or major news, comes in, helping you keep your thesis current without rebuilding your model from scratch. For example, one adidas investor might build a bullish Narrative that leans into premium margins, high single digit revenue growth and a Fair Value closer to €280, while a more cautious investor might stress rising tariffs, intense competition and slower earnings growth that support a Fair Value nearer €182 instead.

Do you think there's more to the story for adidas? Head over to our Community to see what others are saying!

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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