In a market where many consumer
and athletic brands are struggling to maintain momentum, On Holding AG (NYSE:ONON)
continues to stand out as a company delivering strong growth while showing
signs of attractive valuation. With its Q3 2025 earnings now released,
investors have a clearer view of the company’s accelerating revenue, improving
profitability, and expanding global presence. Despite recent stock price
volatility, the fundamentals suggest a business that is executing well and
positioned for long-term success. In this article we will dive into On Holding
recent earnings, stock performance & valuation, growth potential, and the
risks investor should consider.
About On Holding AG
On Holding AG is a Swiss-based
performance-athletic footwear, apparel and accessories business. Founded around
2010 in Zurich, Switzerland, On has built a “premium” running and lifestyle
brand, leveraging its proprietary cushioning and design innovations and
targeting a global customer base. The company went public via its IPO in
September 2021. Its business spans direct-to-consumer (DTC) and wholesale
channels, and its brand has increasingly expanded globally including regions
such as Americas, Europe/Middle East/Africa (EMEA) and Asia-Pacific. The
company emphasises premium pricing, brand positioning, innovation, and full-price
selling, rather than heavy discounting.
On Holding Financial
Performance
On Holding delivered strong quarter in Q3 2025, showcasing the company’s continued momentum. Revenue
for the quarter reached $998 million, up from $751.3 million in Q3 2024,
representing a 32.83% year-over-year increase. Earnings also surged, with EPS
rising to $0.45 compared to $0.11 a year earlier, an impressive 309.09% jump.
On a trailing-twelve-month basis, revenue climbed to $3.61 billion from $2.55
billion, reflecting 41.46% growth, while TTM EPS increased to $0.85 from $0.46,
up 84.78% year over year. Free cash flow per share on a TTM basis came in at $1.32,
slightly lower than $1.47 in the prior period, marking a 10.2% decline. The
company continues to maintain healthy profitability with a Gross profit margin
of 62.4%, Net profit margin of 7.79%, and Free cash flow margin of 12.01%.
Returns also remain strong, with Return on Assets at 8.15% and Return on Equity
at 15.98%, while balance sheet stability is supported by a modest debt-to-equity
ratio of 0.33.
Over the past five years, On
Holding has grown its revenue at a 49.5% CAGR, while net income and free cash
flow have turned positive and expanded rapidly. This shows that On Holding has
been growing fast and consistently during this period, even though its stock
price has been a poor performer since its IPO in September 2021.
On Holding Fiscal 2025
Financial Forecast
Looking ahead, analysts forecast 2025
revenue of $3.72 billion, representing a 42.46% increase from 2024’s $2.61
billion, and project 2025 non-GAAP EPS of $0.94, compared to $1.09 in 2024,
reflecting a -13.66% change. Wall Street remains optimistic, assigning the
stock a Buy rating with an average price target of $61.29, implying 50.26%
upside, while the highest target of $83.60 suggests potential upside of 104.98%
from current levels.
ONON Stock Price Performance
and Valuation
At the time this article was written On Holding stock was trading $40.79 per share. On Holding has seen its stock decline 30.2% over the past year, significantly underperforming the S&P 500, which gained 11.9% during the same period. Since its IPO in September 2021, the stock is up only 4.7%, again underperform the S&P 500’s 51.5% increase over that timeframe. Despite this underperformance, the company’s valuation metrics suggest that the stock may offer attractive upside potential.
ONON currently
trades at a price to sales P/S (TTM) ratio of 3.74 and a forward P/S of 3.7,
which appear reasonable given its strong revenue growth trajectory. Its non-GAAP
price to earnings P/E (TTM) stands at 47.9, with a forward non-GAAP P/E of
43.39. While the price to free cash flow P/FCF (TTM) is 30.9.
Based on Fiscal.ai data, if we
look at the valuation since 2024, the forward P/S, forward P/E, and P/FCF
ratios are all below their historical averages. Although the valuation is still
relatively high, it remains lower than usual due to the stock’s recent
underperformance and the fact that On Holding has only recently turned
profitable. When combined with strong fundamentals, healthy margins, and
analysts projecting substantial upside potential, these valuation levels
suggest that the recent price weakness could present a buying opportunity.
On Holding Growth Potential
On Holding growth prospect
remains robust driven by several factors.
- Explosive Apparel Category
Expansion and Product Diversification
In Q3 2025, On Holding’s apparel sales emerged as a major growth driver, more than doubling on a constant-currency basis with 100.2% growth, and accessories revenue surged 93%. This marked a strategic shift as the company reduced its historical dependency on footwear, which still accounts for over 90% of revenue but is declining as a percentage of total sales. Successful launches of the Cloudsurfer 2 and Cloud 6 models, combined with marketing campaigns featuring celebrities like Zendaya and tennis icons, attracted younger consumers focused on lifestyle and fashion rather than solely performance footwear.
Management aims to double apparel sales exposure, targeting the broader sportswear market where On holds just 2-3% market share versus Nike’s 14.1% and Adidas’s 8.9%. This expansion boosts average transaction value, customer frequency, and lifetime value, helping On overcome the growth ceiling common to pure-footwear brands and capture more share in the multi-billion-dollar apparel market. - Dominant Asia-Pacific Regional
Expansion with 94.2% Constant-Currency Growth
Asia-Pacific is On Holding’s fastest-growing region, with Q3 2025 sales surging 94.2% and 109.2% on a constant-currency basis, showcasing strong market penetration. This growth results from successful localized marketing, new flagship stores in key cities such as Tokyo, and strong consumer demand for premium footwear in affluent Asian markets. In contrast, mature regions like EMEA and the Americas saw more moderate growth of 28.6% and 10.3%, respectively, indicating On is early in its Asian expansion.
The region's younger, affluent consumers with high digital adoption align well with On's direct-to-consumer and premium brand strategies. China alone delivered about 50% year-over-year sales growth, with same-store sales also rising approximately 50%. With only 3% global market share, Asia-Pacific offers significant growth potential and could become On's largest market by 2028, driven by rising incomes and growing sports participation. - Sustained Product Innovation
with CloudTec Technology and Competitive Moat
On Holding's CloudTec technology is a strong proprietary innovation backed by 38 patents and CHF 16.5 million in R&D investment in 2023, offering 82% energy return during running, outperforming Nike's React and Adidas' Boost. The company rapidly innovates, with product cycles every 6-8 weeks, driven by feedback from over 157,000 customers annually, enabling continuous improvements that keep it ahead of larger competitors. New breakthroughs like LightSpray reinforce On as the technology leader in premium athletic footwear.
Partnerships with elite athletes such as Roger Federer and lifestyle influencers bolster its performance and design narrative, supporting premium pricing and brand strength. These innovations drive demand and market share growth across running, training, tennis, and lifestyle categories. While competitors may copy CloudTec, they cannot replicate On’s unique design, brand, and customer ecosystem. This innovation focus creates a durable competitive moat, sustaining market position and margin protection long-term.
Risks to Consider
While On Holding looks like a
compelling stock, we should be mindful of potential risks.
- Intense Industry Competition
On Holding competes fiercely with giants like Nike and Lululemon in athletic footwear and apparel. Nike holds 40% of the global market, while On Holding has swiftly grown to nearly 3%, becoming a notable competitor. This intense rivalry pressures On Holding’s pricing, market share, and margins, demanding continuous innovation, strong marketing, and brand differentiation to sustain growth. - Fashion Trend Volatility
On Holding must navigate rapid shifts in consumer preferences driven by social media, celebrity endorsements, and streetwear culture. The athleisure and footwear market evolves quickly, and brands that fail to stay aligned with these fast-changing fashion trends risk losing relevance and sales momentum. For On Holding, maintaining market presence requires agile adaptation to trends and strong consumer engagement to ensure continued growth and competitiveness. - Supply Chain Disruption
On Holding depends on a complex global supply chain that faces risks from geopolitical tensions, natural disasters, and warehouse transitions. These disruptions have caused operational issues like stockouts and canceled wholesale orders. This fragility is heightened because about 72% of its revenue comes from U.S. performance running shoes, creating a concentration risk that makes the company vulnerable to supply chain interruptions in key markets.
Conclusion
On Holding presents a compelling
blend of growth and value. The company continues to deliver strong revenue and
earnings expansion, supported by healthy margins, solid returns, and a
disciplined balance sheet. Despite recent stock underperformance, valuation
metrics remain attractive relative to its long-term potential, and analyst
targets indicate meaningful upside. While risks exist, On’s global brand
strength, innovation, and expanding market reach position the company as a
promising investment opportunity for growth-focused investors.
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