adidas (XTRA:ADS) Could Be 22% Undervalued As Record Q2 Sales Lift Outlook

adidas (XTRA:ADS) is back in focus after reporting record second quarter 2026 net sales and lifting its full year growth outlook, with strong contributions from Latin America, Japan, South Korea and North America.

See our latest analysis for adidas.

Despite adidas raising its full year growth outlook after record Q2 sales, the stock has recently come under pressure. The 1 day share price return has fallen 11.52% and the 30 day share price return is down 10.12%. That follows a stronger 90 day share price return of 9.4%, while the 1 year total shareholder return is down 2.25% and the 5 year total shareholder return is down 46.17%. This shows the latest earnings strength comes against a longer period of weaker investor outcomes.

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After adidas shares dropped despite record Q2 sales and a raised outlook, the current €161.25 price sits well below several valuation markers. So where does fair value really land within the wide range of estimates?

Most Popular Narrative: 22.3% Undervalued

Against adidas' last close at €161.25, the most followed narrative points to a fair value of €207.59, which implies a sizeable valuation gap built on detailed revenue and earnings forecasts.

The accelerating global health and fitness movement is driving strong demand for adidas' performance and athleisure product categories, as demonstrated by double digit growth in key segments like Running (+25%), Training (+20%), and Basketball. This is described as positioning the company for sustained volume expansion and recurring sales growth (impacts revenue and earnings).
• Expanding middle class incomes and urbanization in emerging markets are enabling adidas to achieve what is described as robust, diversified growth, as reflected by exceptional sales increases in Latin America (+25%), Asia Pacific (China +13%, Japan/South Korea +15%), and key leadership gains in Mexico. This is seen as supporting higher premiums and margin expansion through global revenue diversification (impacts revenue, margin, and scale benefits).

Read the complete narrative.

Want to see how this view turns record sales into a higher fair value for adidas? The narrative leans on sustained top line growth, higher margins and a future earnings profile that assumes stronger profitability than today. Curious which revenue path and profit mix underpin that higher valuation gap?

Result: Fair Value of €207.59 (UNDERVALUED)

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

However, the adidas narrative still faces real tests, including tariff driven cost pressure and rising competition that could squeeze margins and challenge those growth assumptions.

Find out about the key risks to this adidas narrative.

Another View on adidas valuation

The narrative fair value for adidas at €207.59 points to the stock looking 22.3% undervalued against the current €161.25 price. Yet the market is paying a P/E of 20.4x, which sits above the 17.5x fair ratio that our model suggests as a level the market could move towards.

That 20.4x P/E is also slightly higher than the wider European Luxury industry on 20.1x, even though it sits below the peer average of 21.8x. For investors, that mix means there is still some valuation risk baked in on earnings multiples, despite the bigger upside case from the narrative fair value. Which signal do you trust more right now?

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

Next Steps

With adidas carrying both clear risks and appealing rewards, this is a moment to move quickly, review the data, and decide where you stand. To weigh both sides in one place, take a closer look at the 4 key rewards and 1 important warning sign.

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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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