On Holding (ONON): Exploring the Latest Valuation Narrative for the Fast-Growing Sportswear Brand

On Holding (NYSE:ONON) shares have nudged higher over the past week, trading around $42. The company’s performance has sparked some debate, especially as returns have retreated over the past three months.

See our latest analysis for On Holding.

After a strong run, On Holding’s share price momentum has shifted, with a year-to-date share price return of -23.8% and a 1-year total shareholder return of -16.6%. However, its three-year total return stands out at nearly 140%, highlighting the long-term growth story despite recent setbacks.

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With its shares lagging in 2024 but long-term gains still intact, the key question emerges: does the current price represent hidden value in On Holding, or has the market already factored in all future promise?

Most Popular Narrative: 35.5% Undervalued

With On Holding’s last close at $42.21 and the most widely followed narrative setting fair value near $65.45, there is a significant premium assigned to expected growth and profitability shifts. Investor focus turns to the trajectory behind these projections.

The company's ability to launch and quickly scale new product franchises (nine now greater than 5% of revenue), expand beyond running into tennis, trail, lifestyle, and fast-growing apparel, demonstrates successful product innovation and diversification, supporting both average selling price increases and higher future revenue per customer.

Read the complete narrative.

How can On go from today's numbers to commanding this bold valuation? Hidden behind the headline price is a sharp uptick in earnings and major expansion in product lines. Want the full story with the make or break financial math? Check out what’s driving this standout target.

Result: Fair Value of $65.45 (UNDERVALUED)

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

However, the narrative faces clear risks if On Holding’s premium pricing or ambitious expansion lose momentum. This could potentially derail projected growth and earnings gains.

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

Another View: Multiples Paint a Richer Picture

While analyst consensus suggests On Holding is undervalued, a look at its price-to-earnings ratio tells a different story. The company trades at 80.7x earnings, far above the US Luxury industry’s 20.2x average and its peer average of 20.9x, as well as the estimated fair ratio of 32.9x. This much higher valuation raises concerns about future downside if expectations are not met. Will the market continue to reward On Holding's premium, or is a reality check around the corner?

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

Build Your Own On Holding Narrative

If you see things differently or want to dig deeper, you can shape your own view using the data. It only takes a few minutes. Do it your way

A great starting point for your On Holding research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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