Breaking Down On Holding AG (ONON) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for potential opportunities in the sportswear sector? Have you considered On Holding AG (ONON)? With the company's recent financial results for 2024 exceeding expectations, it might be time to delve deeper. But is everything as promising as it seems? Let's explore ONON's financial health, dissecting key figures and эксперт insights to help you make an informed decision.

On Holding AG (ONON) Revenue Analysis

On Holding AG (ONON) has demonstrated significant growth in recent years. Understanding where their revenue comes from and how it's trending is crucial for investors. Here’s a detailed look at On Holding AG's revenue streams:

Breakdown of Primary Revenue Sources:

On Holding AG primarily generates revenue through the sale of performance footwear, apparel, and accessories. Footwear remains the dominant revenue stream. In the fiscal year 2024, the company reported substantial increases in both footwear and apparel sales, driven by innovative product releases and effective marketing strategies.

Year-over-Year Revenue Growth Rate:

On Holding AG has consistently shown high year-over-year revenue growth. For instance, the company reported a 30% increase in sales for the year 2024. This growth is attributed to expanding its global presence and increasing demand for its products.

Contribution of Different Business Segments to Overall Revenue:

While specific segment-wise revenue contributions can fluctuate, footwear generally accounts for the majority of On Holding AG's revenue. Apparel and accessories contribute a smaller, yet growing, portion. Here’s an overview:

• Footwear: Contributes approximately 85% of total revenue.
• Apparel: Accounts for about 12% of total revenue, with growth driven by new product lines.
• Accessories: Makes up the remaining 3%, including items like socks and bags.

Analysis of Any Significant Changes in Revenue Streams:

One notable shift in On Holding AG's revenue streams is the increasing contribution from its apparel segment. The company has strategically invested in expanding its apparel offerings, which has led to higher sales and a more diversified revenue base. Additionally, On Holding AG has seen growth in its direct-to-consumer (DTC) channel, enhancing profitability and brand control. The wholesale channel remains important, but the DTC growth signals a strategic pivot to capture more value directly.

To provide a clearer picture, here is a summary of On Holding AG's revenue performance:

For more detailed insights, you can explore: Breaking Down On Holding AG (ONON) Financial Health: Key Insights for Investors

On Holding AG (ONON) Profitability Metrics

Analyzing On Holding AG's financial health requires a close look at its profitability metrics, which reveal how efficiently the company generates profit from its revenue. Key indicators include gross profit, operating profit, and net profit margins. These metrics, tracked over time and compared against industry averages, provide valuable insights into the company's operational efficiency, cost management, and overall financial performance.

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services. For the fiscal year 2024, On Holding AG reported a gross profit of CHF 983.9 million, representing a gross profit margin of 59.6%. This indicates that for every Swiss Franc of revenue, On Holding AG retains about 59.6 centimes after accounting for the cost of goods sold. The substantial gross profit margin highlights the company's strong brand positioning and pricing power in the premium sportswear market.

Operating profit offers a deeper look into profitability by considering operating expenses such as sales, general, and administrative costs. On Holding AG's operating profit for 2024 stood at CHF 95.9 million, resulting in an operating profit margin of 5.8%. This margin reflects the profitability of the company's core business operations, excluding interest and taxes. A positive operating profit margin suggests that On Holding AG is managing its operational costs effectively.

Net profit, often referred to as the bottom line, is the profit remaining after all expenses, including interest and taxes, have been deducted from total revenue. In 2024, On Holding AG's net profit reached CHF 79.5 million, translating to a net profit margin of 4.8%. This margin represents the ultimate profitability of the company, indicating the percentage of revenue that remains as profit for shareholders after all costs and obligations are met.

Here's a summary of On Holding AG's profitability metrics for 2024:

• Gross Profit: CHF 983.9 million (Gross Profit Margin: 59.6%)
• Operating Profit: CHF 95.9 million (Operating Profit Margin: 5.8%)
• Net Profit: CHF 79.5 million (Net Profit Margin: 4.8%)

Analyzing these profitability metrics over time provides insights into the company's ability to sustain and improve its financial performance. Comparing these ratios with industry averages helps to benchmark On Holding AG's profitability against its competitors, revealing its relative strengths and weaknesses. Effective cost management and positive gross margin trends are crucial for maintaining and enhancing profitability.

Additionally, here is a table summarizing key financial figures for On Holding AG in 2024:

For further insights into On Holding AG's financial health, you can explore this comprehensive analysis: Breaking Down On Holding AG (ONON) Financial Health: Key Insights for Investors

On Holding AG (ONON) Debt vs. Equity Structure

Understanding how On Holding AG (ONON) manages its debt and equity is crucial for assessing its financial strategy and risk profile. This involves looking at the levels of debt the company holds, how it compares to its equity, and how these choices align with industry practices.

As of the fiscal year 2024, On Holding AG's financial structure includes both short-term and long-term debt. Examining the specifics of these debts provides insight into the company's immediate and future financial obligations.

The debt-to-equity ratio is a key metric for understanding On Holding AG's financial leverage. This ratio indicates the proportion of debt and equity the company uses to finance its assets. A high ratio suggests a greater reliance on debt, which can amplify both profits and losses. Here's what to consider:

• Debt-to-Equity Ratio: Analyze On Holding AG's ratio relative to industry averages to gauge whether the company is more or less leveraged than its peers.
• Implications: A higher ratio can mean higher financial risk, while a lower ratio might indicate a more conservative approach.

Recent activities, such as new debt issuances or refinancing, can significantly impact On Holding AG's capital structure. Monitoring these activities helps in understanding the company's strategic financial moves.

Balancing debt and equity is vital for sustainable growth. On Holding AG must strategically decide how much to fund its operations and expansions through debt versus equity. Too much debt can increase financial risk, while too little might limit growth opportunities.

Here’s a breakdown of factors influencing On Holding AG's approach to debt and equity:

• Growth Strategy: Aggressive growth plans might necessitate higher debt levels.
• Market Conditions: Favorable equity markets might encourage equity financing over debt.
• Investor Sentiment: Positive investor sentiment can make equity financing more attractive.

For more insights into On Holding AG and its investors, check out: Exploring On Holding AG (ONON) Investor Profile: Who’s Buying and Why?

On Holding AG (ONON) Liquidity and Solvency

Understanding On Holding AG's financial health requires a close look at its liquidity and solvency. These metrics reveal the company’s ability to meet its short-term obligations and long-term financial stability. Let's delve into the key indicators that provide insights into On Holding AG's financial positioning.

Assessing On Holding AG's Liquidity:

Liquidity ratios offer a clear view of a company's capacity to cover its immediate liabilities. Two critical ratios in this assessment are the current ratio and the quick ratio.

• Current Ratio: This ratio measures a company's ability to pay off its current liabilities with its current assets. A higher current ratio generally indicates better liquidity.
• Quick Ratio: Also known as the acid-test ratio, it gauges a company's ability to meet its short-term obligations with its most liquid assets, excluding inventories.

Analyzing these ratios over time provides a trend of On Holding AG's liquidity position. It is important to compare these ratios with industry averages to benchmark the company's performance against its peers.

Analysis of Working Capital Trends:

Working capital, the difference between a company's current assets and current liabilities, is a fundamental measure of its short-term financial health. Monitoring the trends in working capital can reveal whether On Holding AG is efficiently managing its resources. An increasing working capital generally suggests improved liquidity, while a decreasing trend may signal potential challenges.

Cash Flow Statements Overview:

Cash flow statements provide a comprehensive view of all the cash inflows and outflows of a company. These statements are typically divided into three main sections:

• Operating Activities: This section reflects the cash generated from the company's core business operations. Positive cash flow from operations is a healthy sign, indicating that the company is generating enough cash from its primary activities.
• Investing Activities: This includes cash flow related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Activities: This section covers cash flow related to debt, equity, and dividends. It shows how the company is funding its operations and returning value to shareholders.

Reviewing these cash flow trends helps in understanding On Holding AG's ability to generate cash, invest in its future, and manage its capital structure.

Potential Liquidity Concerns or Strengths:

By analyzing the current and quick ratios, working capital trends, and cash flow statements, potential liquidity concerns or strengths can be identified. For instance:

• A declining current ratio coupled with negative cash flow from operations might raise concerns about the company's ability to meet its short-term obligations.
• Conversely, a consistently high quick ratio and strong positive cash flow from operations would indicate a strong liquidity position.

It’s crucial to monitor these indicators regularly and investigate any significant fluctuations to gain a comprehensive understanding of On Holding AG’s financial health.

To gain more insights into who is investing in On Holding AG and the motivations behind those investments, check out: Exploring On Holding AG (ONON) Investor Profile: Who’s Buying and Why?

On Holding AG (ONON) Valuation Analysis

Assessing whether On Holding AG (ONON) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Here's a breakdown of essential valuation metrics:

Price-to-earnings (P/E) Ratio: The P/E ratio measures the relationship between a company's stock price and its earnings per share (EPS). As of the fiscal year 2024, a higher P/E ratio might suggest that the stock is overvalued because investors are paying more for each dollar of earnings. Conversely, a lower P/E ratio could indicate undervaluation. For On Holding AG, the P/E ratio should be compared against industry peers and its historical P/E to provide a meaningful context.

Price-to-book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio may suggest that the stock is undervalued, while a higher ratio could indicate overvaluation. For ONON, analyzing the P/B ratio in relation to its historical values and industry benchmarks is crucial. Keep in mind that intangible assets might not be well-reflected in the book value, which could skew the ratio.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is used to assess a company's total value relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). A lower EV/EBITDA ratio typically suggests that a company is undervalued compared to its peers. This ratio provides a more comprehensive valuation measure as it considers debt and cash, offering a clearer picture of the company's financial health. For ONON, compare its EV/EBITDA ratio with industry averages to gauge its relative valuation.

Stock Price Trends: Examining the stock price trends over the last 12 months (or longer) provides insights into market sentiment and investor confidence.

• Upward Trend: A consistent upward trend may indicate strong investor confidence and positive market perception.
• Downward Trend: A downward trend could signal concerns about the company's performance or broader market conditions.
• Volatility: High volatility might suggest uncertainty and risk, affecting valuation.

Analyzing these trends alongside the company’s financial performance and significant news events can offer a more informed perspective.

Dividend Yield and Payout Ratios: As of 2024, if On Holding AG distributes dividends, the dividend yield (annual dividend per share divided by the stock price) indicates the return on investment from dividends alone. The payout ratio (percentage of earnings paid out as dividends) shows the sustainability of dividend payments. A high dividend yield might seem attractive, but it should be assessed in conjunction with the payout ratio to ensure the company can sustain those payments. Currently, On Holding AG does not offer dividends.

Analyst Consensus: Monitoring analyst ratings (buy, hold, or sell) and price targets provides a sense of professional sentiment on the stock.

• Buy Ratings: Predominantly 'buy' ratings suggest analysts believe the stock is undervalued.
• Hold Ratings: 'Hold' ratings indicate a neutral stance, suggesting the stock is fairly valued.
• Sell Ratings: 'Sell' ratings imply analysts think the stock is overvalued.

It's important to consider the source and track record of the analysts, as well as the rationale behind their ratings.

The table below summarizes key valuation considerations for On Holding AG:

For further insights into On Holding AG's mission, vision, and core values, refer to Mission Statement, Vision, & Core Values of On Holding AG (ONON).

By evaluating these factors, investors and analysts can form a more comprehensive understanding of On Holding AG's valuation and make informed decisions.

On Holding AG (ONON) Risk Factors

Understanding the risks On Holding AG (ONON) faces is crucial for investors assessing the company's financial health and future prospects. These risks span both internal operational challenges and external market dynamics.

Here's a breakdown of key risk areas:

• Industry Competition: The athletic footwear and apparel market is intensely competitive. On Holding AG (ONON) competes with established global brands that possess significantly greater financial, marketing, and distribution resources. Increased competition could lead to pricing pressures, reduced sales volumes, and decreased market share.
• Regulatory Changes: Changes in international trade policies, tariffs, and regulations can significantly impact On Holding AG (ONON)'s supply chain and distribution networks. Compliance with evolving environmental regulations and labor laws in different regions also poses ongoing challenges.
• Market Conditions: Economic downturns, shifts in consumer preferences, and fluctuations in currency exchange rates can affect demand for On Holding AG (ONON)'s products. A global recession or regional economic slowdown could negatively impact sales and profitability.

Specific operational, financial, and strategic risks highlighted in recent earnings reports and filings include:

• Supply Chain Disruptions: On Holding AG (ONON) relies on a complex global supply chain. Disruptions due to geopolitical events, natural disasters, or other unforeseen circumstances can lead to production delays, increased costs, and reduced product availability.
• Inventory Management: Managing inventory levels effectively is critical. Excess inventory can result in obsolescence and write-downs, while insufficient inventory can lead to lost sales opportunities and customer dissatisfaction.
• Brand Protection: Maintaining brand image and protecting against counterfeiting are essential. Failure to safeguard intellectual property or address negative publicity can harm brand reputation and erode customer trust.
• Financial Risks: Fluctuations in foreign exchange rates can impact revenues and profitability, particularly as On Holding AG (ONON) expands its international presence. The company's debt levels and access to capital markets also influence its financial flexibility.

Mitigation strategies and plans On Holding AG (ONON) may employ to address these risks include:

• Diversifying Supply Chain: Reducing reliance on single suppliers or geographic regions can help mitigate supply chain disruptions.
• Implementing Advanced Inventory Management Systems: Utilizing data analytics and forecasting tools can improve inventory planning and reduce the risk of excess or insufficient stock.
• Strengthening Intellectual Property Protection: Investing in trademark enforcement and anti-counterfeiting measures can safeguard brand assets.
• Hedging Currency Risk: Employing financial instruments to hedge against currency fluctuations can reduce the impact of exchange rate volatility on financial results.

For a deeper dive into On Holding AG (ONON)'s financial health, you can explore Breaking Down On Holding AG (ONON) Financial Health: Key Insights for Investors.

On Holding AG (ONON) Growth Opportunities

On Holding AG (ONON) has shown impressive financial results for 2024, exceeding expectations across various metrics. Net sales reached CHF 2,318.3 million, marking a 29.4% increase on a reported basis and 33.2% on a constant currency basis. The company's gross profit margin stood at 60.6%, with a net income of CHF 242.3 million and an adjusted EBITDA margin of 16.7%. The company's cash balance is nearing CHF 1 billion.

Here's a detailed look at the future growth prospects for On Holding AG:

• Key Growth Drivers:
• Product Innovations: On Holding AG is dedicated to innovation, as demonstrated by its LightSpray™ technology and CloudTec® cushioning. In 2024, the company invested approximately 6.4% of its revenue in research and development.
• Market Expansion: The company is expanding its retail presence, especially in China. In 2024, 19 new retail stores were opened, bringing the total to nearly 50 stores.
• Strategic Partnerships: Collaborations with high-profile figures like Zendaya and Roger Federer enhance brand visibility and consumer perception.

For more insights into the company's mission and values, check out: Mission Statement, Vision, & Core Values of On Holding AG (ONON).

The following points provide a detailed look at the company's revenue growth projections and earnings estimates:

• Revenue Growth:
• For 2025, On Holding AG anticipates a constant currency growth rate of at least 27%, targeting net sales of at least CHF 2.94 billion.
• Analysts estimate sales of $768.08 million for the current quarter, representing a 32.1% year-over-year change.
• Revenue is projected to reach $3.36 billion for the current fiscal year (+27.6% change) and $4.15 billion for the next fiscal year (+23.4% change).
• Earnings Estimates:
• The consensus earnings estimate for the current fiscal year is $1.20 per share, indicating a +9.1% year-over-year change.
• For the next fiscal year, the consensus earnings estimate is $1.59 per share, a +32.6% change from the current year.

The company's strategic initiatives and partnerships are designed to drive future growth:

• Retail Expansion: Increasing the number of retail locations, particularly in key markets like China, boosts apparel sales and brand visibility.
• Product Launches: Introducing new products such as the Cloudpoom Max and the Zendaya co-created footwear line keeps the product line fresh and appealing.
• Brand Building: Investments in marketing and branding initiatives strengthen brand image and customer loyalty.

On Holding AG possesses several competitive advantages that position it for sustained growth:

• Innovative Technology: The proprietary CloudTec® technology offers a unique cushioning system, setting the company apart in the athletic footwear market.
• Strong Brand Recognition: On Holding AG has established a significant presence in both performance running and lifestyle markets.
• Direct-to-Consumer (DTC) Strategy: A robust DTC channel, accounting for a record 48.8% of net sales in Q4 2024, enhances customer relationships and premium margins. In fiscal year 2024, the DTC channel reached CHF 666.5 million, a 29.3% increase compared to the previous year.

Here's an overview of On Holding AG's financial performance metrics:

Despite negative returns on assets and equity, analysts remain optimistic about On Holding AG's future, with earnings expected to grow faster than the US market. The company's high P/E ratio is supported by its forecast growth exceeding the wider market, reflecting investor confidence in its future earnings.