On Holding Reports 2025 Results, Valuation and Growth in Focus

What happened

On Holding AG has announced its fourth quarter and full-year 2025 results and filed its Annual Report on Form 20-F, providing a formal update on its annual performance. The company likely continued its streak of strong growth, with constant-currency sales increases above 30% and gross margins exceeding 60%, as hinted in prior guidance and the DeepValue report. Specifically, based on historical trends, On has leveraged direct-to-consumer expansion and Asia-Pacific growth to achieve profitability, with Q3 2025 gross margin reaching 65.7%. However, this operational success is already embedded in the stock's elevated valuation, trading at around 55x P/E, which prices in sustained high growth. Critical scrutiny reveals that while the results may appear robust, investors must assess underlying risks like competitive pressures from Nike and Hoka, which could challenge future margins and growth.

Implication

For current shareholders, the announcement may offer temporary reassurance, but the high multiples limit near-term upside and increase sensitivity to any growth slowdown. New investors should avoid buying at current prices unless the stock retreats to the $40 attractive entry level identified in the DeepValue report, as the risk-reward remains unfavorable. The sustained gross margins above 60% are positive, but any guidance cut for 2026 could trigger significant multiple compression, given the embedded expectations. Competitive threats from Nike and Hoka, combined with tariff uncertainties, pose material risks that could erode On's pricing power and market share. Ultimately, monitoring the detailed 2026 outlook from the 20-F filing and upcoming quarters will be critical to determine if the growth narrative holds or if a thesis reassessment is needed.

Thesis delta

The 2025 results announcement aligns with the existing thesis of strong growth and margins but does not shift the investment call from 'WAIT'. The key delta will emerge from the 2026 guidance in the 20-F report, which could either validate the durability of performance or signal heightened risks from competition and tariffs. Until that clarity is provided, the recommendation remains to hold off on new investments unless the price drops to more attractive levels or growth sustainability is confirmed.