On Holding (NYSE:ONON): Assessing Valuation Potential After Recent Share Price Rebound

On Holding (NYSE:ONON) has seen its stock deliver a mixed performance across recent timeframes. The stock moved higher by 12% in the past month, though it remains down over the past year. Investors are paying close attention to these dynamics as the company navigates a changing retail landscape.

See our latest analysis for On Holding.

While On Holding’s 1-year share price return is in the red, recent momentum is shifting as the stock rebounded nearly 12% over the past month. Long-term holders have still enjoyed a remarkable 124% total shareholder return over three years, which may indicate growth potential as perceptions improve.

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With recent gains and long-term outperformance, investors may wonder whether On Holding is currently undervalued or if the share price already reflects the company's growth prospects. Is this a buying opportunity, or is the market anticipating future expansion?

Most Popular Narrative: 28.2% Undervalued

At $43.99, On Holding trades well below the narrative’s fair value estimate of $61.29. This frames the stock’s latest rally in a provocative new light for growth-focused investors. These numbers suggest that the consensus narrative sees significant room for upward re-rating if the company executes on its strategies.

The acceleration in DTC (Direct-to-Consumer) and e-commerce channels, with DTC reaching new highs (41.1% of sales in Q2 and up 54% year over year), gives On more control over brand, pricing, and customer data while increasing gross and EBITDA margins. This operational catalyst is likely to further expand profitability as DTC continues its mix shift.

Read the complete narrative.

Want a glimpse at the expectation engine fueling this valuation? The narrative hinges on rapid revenue growth, a surge in future profit margins, and a bold re-rating in profitability multiples. The secret formula behind this price target? The full narrative unpacks the growth assumptions propelling On Holding’s fair value sky-high—see which forecasts have bulls talking.

Result: Fair Value of $61.29 (UNDERVALUED)

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

However, sustained reliance on premium pricing or rapid store expansion could backfire if consumer demand shifts or operational challenges arise. This could put margins and growth targets at risk.

Find out about the key risks to this On Holding narrative.

Another View: Market Multiples Raise Caution

Looking at the company’s price tag through the lens of the price-to-earnings ratio paints a more cautious picture. On Holding trades at 52.6x earnings, almost double the peer average of 28.3x and the US Luxury industry’s 20x benchmark. The fair ratio, which the market could eventually move toward, is 26.8x. This wide gap suggests investors may be paying a significant premium. Does this raise the risk that expectations are running ahead of fundamentals?

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

Build Your Own On Holding Narrative

If you have a different perspective or would rather draw your own conclusions, crafting a personal analysis is quick and straightforward. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding On Holding.

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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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