Stock Analysis & Valuation On Holding AG (ONON)

• Previous Close: $45.25
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	77.40	71
Intrinsic value (DCF)	305.31	575
Graham-Dodd Method	9.50	-79
Graham Formula	32.10	-29

Strategic Investment Analysis

Company Overview

On Holding AG (NYSE: ONON) is a Swiss-based performance sportswear company specializing in innovative athletic footwear, apparel, and accessories. Founded in 2010, On has rapidly gained recognition for its proprietary CloudTec cushioning technology, which delivers a unique running experience. The company operates in the competitive global athletic apparel and footwear market, catering to both professional athletes and recreational consumers. On distributes its products through independent retailers, e-commerce, and company-owned stores, leveraging a direct-to-consumer (DTC) model to enhance brand loyalty and margins. With a strong presence in Europe and North America, On has positioned itself as a premium performance brand, competing with established giants like Nike and Adidas. The company’s focus on sustainability, technological innovation, and premium pricing differentiates it in the crowded sportswear sector. On’s revenue growth and expanding market share reflect its successful penetration into the high-performance athletic segment.

Investment Summary

On Holding AG presents an attractive growth opportunity in the athletic apparel and footwear market, supported by strong brand momentum, innovative product offerings, and a scalable DTC model. The company’s revenue growth (FY 2023: $2.32B) and profitability (net income: $242M) demonstrate its ability to compete with industry leaders. However, its high beta (2.31) suggests significant volatility, and its premium positioning may limit mass-market appeal. The lack of dividends and reliance on continued innovation pose risks, but strong operating cash flow ($510.6M) and a healthy balance sheet (cash: $924.3M, debt: $347.6M) provide financial flexibility. Investors should weigh On’s growth potential against sector competition and macroeconomic pressures affecting discretionary spending.

Competitive Analysis

On Holding AG competes in the high-performance athletic footwear and apparel market, where differentiation through technology and brand perception is critical. Its CloudTec cushioning system provides a unique selling proposition, appealing to runners seeking a balance of comfort and performance. Unlike mass-market competitors, On targets a premium niche, allowing for higher margins but limiting volume scalability. The company’s DTC strategy enhances profitability and customer engagement, though it faces challenges in scaling retail operations compared to giants like Nike and Adidas. Sustainability initiatives, such as recyclable materials, align with growing consumer preferences but require ongoing investment. On’s rapid growth has been fueled by influencer endorsements and word-of-mouth marketing, but maintaining this momentum against deep-pocketed rivals will be key. Its Swiss heritage and design aesthetic differentiate it from U.S.-dominated brands, though global supply chain risks remain a concern. Overall, On’s competitive advantage lies in innovation and premium branding, but long-term success depends on sustaining technological leadership and expanding market reach.

Major Competitors

• Nike, Inc. (NKE): Nike dominates the global athletic footwear and apparel market with unmatched scale, brand recognition, and R&D capabilities. Its strengths include a vast distribution network, iconic marketing, and diversified product lines. However, its mass-market focus contrasts with On’s premium niche, and recent supply chain disruptions have exposed vulnerabilities. Nike’s sheer size limits agility compared to smaller innovators like On.
• Adidas AG (ADDYY): Adidas is a key competitor with strong heritage in performance and lifestyle footwear. Its strengths include global reach, collaborations (e.g., Kanye West’s Yeezy), and soccer dominance. However, recent management turmoil and over-reliance on retro styles have hampered innovation. On’s fresher brand image and running-specific focus give it an edge in niche segments.
• Lululemon Athletica Inc. (LULU): Lululemon excels in premium athletic apparel, particularly yoga and lifestyle segments. Its strengths include a loyal customer base and high margins, but its footwear expansion is nascent compared to On’s established running shoes. Lululemon’s apparel focus complements rather than directly competes with On’s core footwear business.
• Puma SE (PMMAF): Puma competes in performance and lifestyle categories, with strengths in soccer and motorsports sponsorships. Its affordability and trendy designs appeal to younger consumers, but it lacks On’s technological differentiation in running. Puma’s broader price range makes it a competitor in mid-tier markets where On does not play.
• Skechers U.S.A., Inc. (SKX): Skechers focuses on comfort and casual footwear, with strengths in mass-market distribution and value pricing. However, it lacks On’s performance credibility and premium branding. Skechers’ strength in walkers and casual wear contrasts with On’s running-centric positioning.