• If you are looking at On Holding and wondering whether the current share price still represents good value, it helps to break the story into what the stock has done and how that lines up with what it might be worth.
• The share price closed at US$42.92, with returns of a 4.7% decline over 7 days, a 12.5% decline over 30 days, an 8.6% decline year to date, a 28.1% decline over 1 year and a 102.6% gain over 3 years. This can leave the stock feeling very different depending on your time frame.
• Recent headlines around On Holding have focused on the brand’s position in performance footwear and its presence in the premium segment of the market. That attention has helped frame expectations about how much growth is already reflected in the share price, and may help explain why shorter term moves look quite different to the multi year return.
• Our Simply Wall St valuation model currently gives On Holding a 1 out of 6 valuation score. Next we will walk through what that means using several common valuation approaches, and finish by looking at a fuller way to think about value that goes beyond a single score.

On Holding scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: On Holding Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash a company may generate in the future, then discounts those cash flows back to what they could be worth in today’s money. It is essentially asking what future cash is worth right now.

For On Holding, the latest twelve month free cash flow is approximately CHF 331.7 million. Using a 2 Stage Free Cash Flow to Equity model, cash flows are projected out to 2035, with analyst inputs provided up to 2028 and further figures extrapolated by Simply Wall St after that. For example, projected free cash flow for 2028 is CHF 605.0 million, with intermediate years such as 2026 and 2027 at CHF 384.3 million and CHF 499.7 million respectively.

On this basis, the model arrives at an estimated intrinsic value of US$51.65 per share. Against the recent share price of US$42.92, this suggests the stock is 16.9% undervalued according to this DCF approach.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests On Holding is undervalued by 16.9%. Track this in your watchlist or portfolio, or discover 55 more high quality undervalued stocks.

Approach 2: On Holding Price vs Earnings (P/E)

For profitable companies like On Holding, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. It ties the share price directly to current profits, which most investors can relate to more easily than cash flow models.

What counts as a “normal” P/E depends a lot on how quickly earnings are expected to grow and how risky those earnings might be. Higher growth and lower perceived risk often support a higher P/E, while slower growth or higher uncertainty usually point to a lower multiple.

On Holding currently trades on a P/E of 49.68x. That sits above the Luxury industry average of 20.66x and also above the peer average of 25.13x. Simply Wall St’s Fair Ratio for the stock is 31.23x, which is its proprietary view of what the P/E could be given On Holding’s earnings growth profile, margins, industry, market cap and risk factors.

The Fair Ratio is more tailored than a simple industry or peer comparison, because it adjusts for company specific characteristics rather than assuming all firms should trade on the same multiple. Set against this Fair Ratio of 31.23x, the current P/E of 49.68x looks higher.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your On Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which combine your view of a company’s story with your own assumptions about future revenue, earnings and margins to arrive at a personal fair value.

A Narrative is simply your storyline for On Holding, written in numbers and words, where you spell out what you think happens to the business, plug those expectations into a forecast, and see what that implies for fair value.

On Simply Wall St, Narratives live in the Community page, so you can quickly connect a company’s story to a financial model, compare the resulting fair value to the current share price, and use that comparison to decide whether the stock looks attractive or expensive to you.

Narratives on the platform are refreshed when new information such as news or earnings comes in. You can see how other investors look at On Holding. For example, one Narrative might assume a relatively low fair value while another expects a much higher figure based on a different view of the brand’s long term potential.

Do you think there's more to the story for On Holding? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.