On Holding (ONON) Stock Looks Like A Bargain While Broader Checks Stay Mixed

On Holding stock has fallen sharply year to date, yet several valuation checks suggest the current share price may sit well below an estimate of intrinsic value based on discounted future cash flows and market multiples.

• The share price is down 39.3% year to date, which means recent weakness is a central part of the story for anyone looking at On Holding today.
• Expectations for the brand to keep converting revenue into cash flow can support the case for a recovery, while any slowdown in demand or pressure on profitability may limit how quickly that cash flow shows up.
• A valuation review across multiple methods gives On Holding a mixed overall read, with a value score of 3 out of 6 that points to neither a clear bargain nor a clearly expensive stock on the broader checks.

The issue now is whether the discount implied by the intrinsic value estimate and market multiples is enough to compensate for the risks that have pulled On Holding lower this year.

Spot opportunities beyond On Holding's recent share price slide, and compare it with our hand picked list of 45 high quality undervalued stocks.

Is On Holding a Bargain on Cash Flow?

The Discounted Cash Flow (DCF) model here uses a 2 stage approach based on projected free cash flows to equity. For On Holding, the latest twelve month free cash flow is about CHF 437.4 million, and analysts and estimates point to cash flows that are expected to change over the coming decade rather than a shrinking base.

When those projected CHF cash flows are discounted back and combined with a terminal value, the model arrives at an estimated intrinsic value of about $54 per share. Compared with the current market price, this output suggests the stock trades at a material discount, with the DCF indicating that On Holding is 47.6% undervalued on these cash flow assumptions.

On this DCF view, On Holding stock currently appears undervalued relative to its projected cash generation.

Our Discounted Cash Flow (DCF) analysis suggests On Holding is undervalued by 47.6%. Track this in your watchlist or portfolio, or discover 45 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for On Holding.

Is On Holding a Bargain on Earnings?

P/E is often a clean way to compare consumer brands like On Holding with peers using the same earnings yardstick. On Holding currently trades on a P/E of 19.4x, which is higher than the luxury industry average of 16.4x and also above the peer group average of 14.8x.

The valuation model used here suggests a fair P/E ratio of about 23.9x for On Holding, based on its sector, size and risk profile. That is above both the market references and the current 19.4x, which indicates that the stock is trading below the level implied by this tailored earnings benchmark.

On this P/E view, On Holding stock appears undervalued relative to the earnings multiple indicated by the model.

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

The On Holding Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for On Holding pick up where the valuation checks leave off. They spell out the specific paths for On Holding's growth, margins and earnings that would need to play out for the stock to be worth materially more or less than today's price, and sit on the company's Community page. Where a single ratio or model offers one number, Narratives describe the future that number relies on so you can watch how it unfolds over time.

Community views on On Holding are wide apart. One side is focused on premium brand upside, and the other on execution risk in key markets.

Bull case: 62% undervalued

"Scaling of direct to consumer channels, through highly productive flagship stores and a tightly integrated e commerce ecosystem, is boosting customer loyalty and omnichannel lifetime value while leveraging operational efficiencies and AI driven planning tools..."

Read the full Bull Case to see why On Holding could be undervalued

Bear case: 14% overvalued

"Hyper-aggressive growth expectations anchored in sustained above 30% constant currency CAGRs rely on a flawless rollout of new technologies like LightSpray and continuous franchise refreshes..."

Read the full Bear Case to see why On Holding could be overvalued

Do you think there's more to the story for On Holding? Head over to our Community to see what others are saying!

The Bottom Line

On Holding screens as undervalued on both the Discounted Cash Flow (DCF) intrinsic value estimate and the tailored earnings multiple, yet the broader checks point to a more mixed overall picture. That combination suggests the stock could offer value if its cash generation and earnings profile stay aligned with current assumptions. The crux for investors is whether On Holding can sustain the brand driven growth and profitability path implied in those models, or whether execution risk in key markets ends up justifying the current discount.

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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