Great brands are rare. When a company becomes part of how people express themselves, the returns to shareholders can be exceptional.
On is rapidly gaining market share in the sportswear industry.
We have seen this firsthand in our discussions with store managers, who are ordering more products and recently increasing the space dedicated to the brand. On is set to outgrow all of its competitors through 2029.
With On, we see a brand that is already established, making the story less risky, but still early enough to have significant room to grow. We believe On is reaching an inflection point, with interest in the brand building rapidly while the stock trades at a very attractive valuation.
On recently signed Kylian Mbappé, who left Nike to help build On’s new soccer division. A similar dynamic played out with Roger Federer in 2019, before On went on to quickly grow its presence in tennis.
When looking at search interest across major athletic footwear brands, On clearly stands out, both in terms of growth and total interest.
Over the past two years, the market has punished On over concerns about a tougher U.S. environment and a weaker consumer. We think this misses the bigger picture. On continues to grow at high rates despite these headwinds, and we view the recent weakness as an opportunity to invest in a fast-growing brand at a much more attractive valuation.
In this piece, we dive into the company, drawing on our recent on-the-ground research and conversations with On’s investor relations team.
Table of Contents
Why Now?
Business Overview
Industry Overview
Growth Is Just Getting Started
Can ON Succeed in China?
In Conversation with On
On-the-Ground Research
Financials
Valuation & Price Target
Key Risks
Our Final Thoughts
We are adding On Holding AG (NYSE: ONON) to our portfolio, the “Aurelion Index”.