Is ONON Worth Buying Now as Growth Collides With Execution Risks?

On Holding AG ONON continues to grow across regions, channels and categories, but the investment case is increasingly tied to execution. Wholesale restraint, rising operating costs and additional U.S. tariffs could pressure near-term results even as the premium brand expands.

The question is whether ONON's growth profile is enough to offset those risks at today's lower valuation. The answer looks mixed, with operating momentum remaining attractive but near-term signals favoring patience.

ONON Growth Engines Remain Broad and Fast

Second-quarter net sales increased 21.6% at constant currency, with growth across every major region. Asia-Pacific sales rose 54.7%, Europe, the Middle East and Africa advanced 20.5% and the Americas increased 13% on the same basis.

Category growth also broadened beyond footwear. Apparel net sales climbed 56.2% at constant currency and accessories increased 102.2%, versus 18.9% growth in footwear. That pace compares with a more measured backdrop at major peers. NIKE, Inc. NKE reported fiscal 2026 fourth-quarter revenues down 4% on a currency-neutral basis. Deckers Outdoor Corporation DECK reported first-quarter fiscal 2027 HOKA brand sales growth of 7.7%.

On Holding's DTC Mix Supports Better Economics

Direct-to-consumer sales increased 34.3% at constant currency in the second quarter and reached 45.7% of net sales, up from 41.1% a year earlier. Direct-to-consumer growth also outpaced wholesale in every region.

E-commerce exceeded management's expectations in each region, while owned stores generated growth from both new locations and comparable sales. A larger direct-to-consumer mix gives ONON more control over merchandising, consumer data and premium brand presentation while supporting full-price execution.

ONON Spending and Wholesale Risks Cloud Leverage

Selling, general and administrative expenses increased 18.5% year over year to CHF 436.3 million, faster than reported net-sales growth of 13.5%. Marketing expense rose 32.4% and selling expense increased 33.5% as ONON invested in brand building and retail expansion.

Wholesale growth was more restrained at 12.7% on a constant-currency basis. Management deliberately limited sell-in amid a promotional multi-brand environment to protect full-price integrity and channel inventory health. Additional Section 301 tariffs imposed in July 2026 are also expected to increase duties, adding another cost variable.

ONON's Valuation Leaves a Mixed Entry Point

ONON trades at 14.5X forward 12-month earnings, well below its three-year median of 44.1X and at the low end of its three-year range. The reset makes the stock substantially less expensive than it has been historically.

Image Source: Zacks Investment Research

The current multiple still exceeds the Zacks sub-industry's 12.7X. The Zacks Consensus Estimate for current-fiscal-year earnings has also declined 2.1% over the past four weeks, so the lower valuation comes with weaker near-term estimate trends.

Image Source: Zacks Investment Research

ONON's Mixed Signals Favor Patience

ONON's growth remains broad, direct-to-consumer momentum is improving the channel mix and the premium model continues to support margin expansion. Yet spending growth, wholesale restraint and tariff uncertainty make the current entry point less clear-cut than the lower multiple alone suggests.

The stock currently carries a Zacks Rank #4 (Sell). ONON also has a Growth Score of A, Momentum Score of A and VGM Score of A, but a Value Score of D. The Style Scores are designed to complement the Zacks Rank rather than override it. For investors weighing growth against execution risk, the combination supports a wait-and-see stance rather than treating the valuation reset as a clear buying signal.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research