Is ONON a good stock to buy? We came across a bullish thesis on On Holding AG on Sensus Capital Research’s Substack. In this article, we will summarize the bulls’ thesis on ONON. On Holding AG’s share was trading at $36.73 as of April 21st. ONON’s trailing and forward P/E were 47.20 and 24.63 respectively according to Yahoo Finance.
djile/Shutterstock.com
On Holding AG, together with its subsidiaries, develops and distributes performance sports products under the On brand in Switzerland, the rest of Europe and internationally. ONON is drawing renewed attention as the market discounts the stock following guidance that came in below expectations, despite still implying strong underlying performance.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
The company guided to approximately 23% year-over-year constant currency growth, alongside better-than-expected margin expansion, suggesting that operational efficiency is improving even in a challenging macro environment.
While the headline guidance miss has weighed on sentiment, the underlying fundamentals remain compelling, particularly given the rarity of sustaining 20%+ growth on a multi-billion-dollar revenue base within the apparel industry.
A key differentiator for ONON lies in its strategic investment in manufacturing innovation, specifically the adoption of robotics in its new facility in South Korea. This move has the potential to significantly enhance production scalability while improving unit economics, a combination that could structurally strengthen the company’s competitive moat. Unlike many traditional apparel companies that struggle to justify high capital expenditures in manufacturing, ONON appears positioned to leverage automation to drive both margin expansion and supply chain efficiency over time.
In a market where most apparel players are facing demand headwinds and margin pressure, ONON’s ability to deliver high growth alongside improving profitability stands out. The current market reaction appears to overlook the long-term implications of its operational strategy and growth trajectory. As a result, the stock presents a potentially attractive opportunity, with the disconnect between sentiment and fundamentals creating a favorable risk/reward profile for investors willing to look beyond near-term guidance concerns.
Previously, we covered a bullish thesis on On Holding AG (ONON) by Sanjiv in October 2024, which highlighted the company’s rapid global expansion, strong DTC growth, premium positioning, and innovation-led revenue momentum despite valuation concerns. ONON’s stock price has depreciated by approximately 27.12% since our coverage due to investor concerns over softer-than-expected forward revenue guidance, margin pressure from rising operating costs, and broader valuation compression in premium consumer discretionary stocks. Sensus Capital Research shares a similar view but emphasizes on margin expansion and robotics-led efficiency.
Leave a Reply