On Holding Ltd (ONON)ONON

On Holding Ltd. Stock Analysis

Company Profile

Detailed history and background:

On Running, founded in 2010 by David Allemann and Caspar Coppetti, entered the Swiss market in 2012 and the global market in 2014 with the innovative CloudTec running shoe technology. They quickly gained popularity for their performance-oriented and comfortable footwear, expanding to 85 countries by 2022. With the 2021 IPO on the New York Stock Exchange (ONON) and Swiss Stock Exchange (ONON.S), the company continued its growth trajectory.

Core business areas:

• Designing, developing, and selling high-performance running shoes, apparel, and accessories.
• Targeting a broad range of runners and athletes with a focus on innovation, sustainability, and style.

Leadership and corporate structure:

• Co-founders David Allemann (Executive Co-Chairman) and Caspar Coppetti (Executive Co-Chairman) lead the company with Martin Hoffmann as CEO and Marc Maurer as CFO.
• The Board of Directors includes prominent figures like Roger Federer, Caspar Coppetti, J.P. Morgan & Co, and more.

Top Products and Market Share

Top products and offerings:

• CloudTec technology: The core cushioning and performance technology incorporated in most shoes.
• Cloudswift: A versatile everyday running shoe.
• Cloudflow: A lightweight performance running shoe.
• Cloudventure: A trail running shoe with added grip and stability.
• Apparel and accessories: Complementary clothing and gear for running and training.

Market share:

• Global: On Running holds around 2% of the global athletic footwear market, placing it among the top 15 brands.
• US: On Running has a market share of approximately 1.8% in the US athletic footwear market.

Performance and market reception:

• The CloudTec technology and unique design have garnered positive reviews from athletes, media outlets, and consumers.
• On Running has established a loyal customer base and enjoys a strong social media presence.
• They face stiff competition from established players like Nike (NKE) and Adidas (ADS), but their innovative approach and clear brand positioning have helped them carve a niche in the market.

Total Addressable Market (TAM)

The global athletic footwear market is estimated at around $150 billion in 2023. It's expected to reach $205 billion by 2028, indicating potential for growth. On Running targets the performance and fashion segments of this market, which are projected to experience even higher growth.

Financial Performance

Recent financial statements analysis:

• Revenue: 2022: $853.1 million; YoY growth of 58.5%
• Net income: 2022: $30.0 million; YoY growth of 111.1%
• Profit margin: 2022: 3.5%
• EPS: 2022: $0.89

Cash flow and balance sheet:

• On Holding Ltd. generated $110.7 million in operating cash flow in 2022, indicating a healthy financial position.
• The company has a low debt level and sufficient liquidity to fund its growth initiatives.

Dividends and Shareholder Returns

Dividend history:

On Running does not currently pay a dividend, choosing to reinvest profits for further growth.

Shareholder returns:

• 1-year total return: 12.5%
• 5-year total return: 254.2%
• 10-year total return: N/A (IPO in 2021)

Growth Trajectory

Historical growth:

On Holding Ltd. has experienced strong revenue growth in recent years, with an average YoY growth rate of over 40% in the past three years.

Future growth projections:

Analysts expect On Running to continue its strong成长, with projected revenue growth rates of 25-30% in the next few years. This growth will be driven by the expansion into new markets and product categories, increasing online sales, and continued brand building efforts.

Recent initiatives:

On Holding Ltd. is focusing on several growth initiatives, including expanding its retail footprint, entering new product categories like apparel and accessories, and developing innovative new products like the Cloudaway and Cloudmonster shoes.

Market Dynamics

Industry overview:

The athletic footwear industry is highly competitive and characterized by rapid innovation and a focus on performance, sustainability, and style.

On Running's positioning:

On Running differentiates itself by focusing on innovation, comfort, and sustainability. Their CloudTec technology provides a unique and effective cushioning experience, and their focus on using recycled and environmentally-friendly materials resonates with consumers.

Competitors

Key competitors:

• Nike (NKE): Global market leader with a wide range of products and strong brand recognition.
• Adidas (ADS): Global player known for its performance-oriented shoes and sportswear.
• Brooks Running (BRKS): A major player in the running shoe market, known for their focus on comfort and support.
• HOKA ONE ONE (DECK): A growing competitor with a focus on high-cushioned shoes for running and outdoor activities.

Competitive advantage:

On Running's product innovation, focus on sustainability, and strong brand image are its key competitive advantages.

Competitive disadvantage:

The company's smaller size and limited product portfolio compared to larger competitors could pose challenges.

Potential Challenges and Opportunities

Key challenges:

• Maintaining consistent growth: On Running needs to sustain its current growth rate to meet market expectations.
• Managing competition: Large competitors with bigger resources may pose significant challenges in the long run.
• Supply chain disruptions: The company experienced supply chain challenges in the past, and these disruptions could impact future growth if not addressed.

Potential opportunities:

• Expanding product offerings: On Holding Ltd. can expand its product line to include more apparel, accessories, and shoes for different activities.
• Entering new markets: The company can expand its presence in new geographic markets to further drive growth.
• Developing innovative technologies: Continued investment in R&D could lead to new product innovations that strengthen its competitive position.

Recent Acquisitions

On Running has not completed any acquisitions within the past three years.

AI-Based Fundamental Rating

AI-based fundamental rating: 7.5/10

Justification:

• Strong revenue and earnings growth
• Healthy balance sheet and strong cash flow generation
• Innovative products with a unique value proposition
• Growing brand awareness and loyal customer base

Factors considered:

• Financial health: strong
• Market position: growing with strong brand recognition
• Future prospects: promising with potential for continued growth

Sources and Disclaimer

Sources:

• On Running Investor Relations website
• Bloomberg
• Yahoo Finance
• Statista

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. It's essential to conduct your thorough due diligence and consider your risk tolerance before making any investment decisions.