Is On Holding’s Recent Rally Still Supported by Its Long Term Growth Story in 2025?

• If you are wondering whether On Holding is still a compelling growth story at a fair price, or if the stock has already sprinted too far ahead of its fundamentals, this breakdown is for you.
• After a choppy stretch where the stock is down 12.3% year to date and 14.3% over the last year, the recent 17.7% jump over the past month and 198.3% gain over three years shows investors are still willing to back the long term story when sentiment turns.
• Much of the latest price action has been driven by growing enthusiasm for the brand as it expands its footprint in performance running, lifestyle, and direct to consumer channels. Investor focus has zeroed in on how sustainable that growth is as On competes with bigger incumbents and leans into new product lines.
• Despite the buzz, On Holding only scores 1 out of 6 on our undervaluation checks. In this article, we will unpack what traditional valuation methods say about the stock. We will then finish with a more complete way to think about its long term value that goes beyond simple multiples and models.

On Holding scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: On Holding Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and discounting those cash flows back to today. For On Holding, the model uses a 2 stage Free Cash Flow to Equity approach, starting from its last twelve months free cash flow of about CHF 331.7 million.

Analysts provide detailed forecasts for the next few years, with free cash flow expected to reach around CHF 625 million by 2028. Beyond that point, Simply Wall St extrapolates the trend, with projections reaching roughly CHF 1.06 billion of free cash flow by 2035 as growth gradually slows from high double digits to more mature mid single digit rates.

When all of these forecast cash flows are discounted back to today, the DCF model suggests an indicative intrinsic value of about $56.56 per share. Compared with the current market price, this framework implies the stock could be roughly 14.1% below this estimate of value, indicating the market may not be fully reflecting On Holding's longer term cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests On Holding is undervalued by 14.1%. Track this in your watchlist or portfolio, or discover 910 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 On Holding.

Approach 2: On Holding Price vs Earnings

For profitable companies, the price to earnings ratio is often the clearest way to see how much investors are willing to pay for each dollar of earnings. A higher PE usually reflects expectations of faster growth or lower perceived risk. In contrast, slower growth, more cyclicality, or higher risk tends to justify a lower, more conservative PE range.

On Holding currently trades at about 57.47x earnings. That is well above the broader luxury industry average of roughly 20.17x and also ahead of its listed peer group, which sits closer to 28.61x. To put this into better context, Simply Wall St calculates a Fair Ratio of 30.98x for On. This is the PE level you might expect once you factor in its earnings growth profile, margins, industry positioning, market cap, and company specific risks.

This Fair Ratio is more informative than a simple comparison with peers or the industry because it adjusts for whether On deserves a premium given its fundamentals, rather than assuming all luxury names should trade at similar multiples. Comparing the Fair Ratio of 30.98x with the current PE of 57.47x suggests the stock is pricing in a lot of optimism and screens as significantly overvalued on this metric.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your On Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an approach on Simply Wall St where you combine your view of a company’s story with explicit forecasts for its future revenue, earnings, and margins, and then translate that into your own Fair Value to compare against today’s share price.

A Narrative is essentially your personal investment storyline for On Holding that connects what you believe about its brand strength, product expansion, and competitive edge to a set of financial assumptions. The platform then turns these assumptions into a dynamic valuation you can revisit as conditions change.

Available on the Community page and used by millions of investors, Narratives are kept up to date as new information such as earnings releases or major news flows in. This helps you quickly see whether your Fair Value still supports buying, holding, or selling given the current market price.

For example, one optimistic On Holding Narrative might assume revenue keeps compounding above 22 percent a year with margins climbing into the low teens and justify a Fair Value closer to the upper analyst target range. A more cautious Narrative might lean on slower growth, lower margins, and a discounted multiple to anchor a Fair Value nearer the lowest analyst estimate. The difference between those two views is the opportunity for you to decide which story you find more credible.

Do you think there's more to the story for On Holding? 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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