The On Holding (NYSE: ONON) athletic shoes are gaining real attention and traction among athletes and everyday adults running errands. The company has been one of the fastest-growing brands this decade, but this year the stock is down about 23%. The problem seems to be an intentional slowdown that’s testing investors’ patience.
In August, shares dropped precipitously after second-quarter sales missed Wall Street’s estimates. On experienced the largest one-day drop in its history as a slowdown in wholesale racked investors’ nerves.
Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
It’s all part of the plan for On
The slowdown is intentional, however, as On is limiting shipments to retailers to promote full-price sales and make room for new products in the coming year. The business’s fundamentals look strong as well.
In its latest quarterly report, On’s direct-to-consumer sales grew 34.3% while gross margin widened to 65.4% year over year. Net sales in apparel were up 56.2%. Management expects constant-currency sales to grow in the low-20% range in 2026. While that’s a slight revision down from its previous guidance, it’s still a healthy trajectory as the company expands into other sports such as football and golf. The company is targeting $7 billion in sales with this expansion, an ambitious goal.
The shoe and sportswear company also recently authorized a $1 billion share buyback. On is trading at about 21 times trailing earnings, and with a price-to-earnings growth ratio well below 1 at 0.49. This suggests the stock is fairly priced and is actually currently under the analysts’ consensus price target of $43.55.
I don’t think there’s anything inherently wrong with On Holding, but investors should be patient as the company navigates through its slowdown and heads into 2027. The business’s growth may slow somewhat, but On is running on solid financial ground.
Should you buy stock in On Holding right now?
Before you buy stock in On Holding, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and On Holding wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $350,756!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,363,905!*
