Amer Sports Q3 Beat Reinforces Growth Amid Persistent Inventory and Valuation Concerns

What happened

Amer Sports reported a beat-and-raise third quarter, exceeding earnings expectations and lifting full-year guidance despite a cautious consumer environment. This performance builds on Q2 2025's 23% revenue growth and 58.5% gross margin, underscoring strong brand momentum in segments like Arc'teryx and Salomon. Management's decision to raise guidance, even while factoring in a 30% U.S. tariff, highlights confidence in pricing power and direct-to-channel execution. However, inventory remains elevated at 29% year-over-year, increasing the risk of markdowns and working-capital strain. The stock's high valuation, with a P/E of 76x, continues to cap near-term upside, keeping the risk-reward balanced.

Implication

Investors should interpret the Q3 beat as validation of Amer Sports' brand-led growth and pricing discipline, particularly in premium segments. The raised guidance signals management's ability to navigate tariffs and sustain demand, which could support longer-term upside if execution holds. However, elevated inventory levels pose a clear threat to margins and cash flow, requiring close monitoring of holiday sell-through to avoid markdowns. With the stock already pricing in high expectations, any misstep on inventory or tariff pass-through could trigger downward pressure. Thus, maintaining a HOLD is prudent until evidence emerges of inventory normalization and resilient gross margins.

Thesis delta

The Q3 results confirm the positive execution trends noted in the DeepValue report but do not shift the core thesis, as inventory and valuation risks remain elevated. A move to BUY would require clear progress on inventory reduction and sustained margin strength amid tariffs, neither of which is yet assured.