• Wondering whether On Holding stock still offers value after all the recent noise, or if the current price already reflects the story you are buying into?
• The share price last closed at US$39.81, with the stock up 6.8% over the past week and 8.8% over the past month, yet still down 15.2% year to date and 31.9% over the past year. This combination presents both recovery hopes and questions about risk.
• Recent coverage has focused on how On Holding fits into premium sportswear trends and the competitive pressure in performance footwear, as investors weigh brand strength against execution risks. Commentary has also highlighted how expectations around future growth are influencing sentiment after a period of sharp share price swings.
• Against that backdrop, On Holding currently records a value score of 2 out of 6. The next step is to compare what different valuation methods say about the stock today and then look at an even richer way to understand value beyond the usual ratios.

On Holding scores just 2/6 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, or DCF, model estimates what a stock could be worth by projecting future cash flows that the company may generate and then discounting those cash flows back into today's money.

For On Holding, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in CHF. The latest twelve month Free Cash Flow is CHF 318.0 million. Analyst inputs cover the nearer years, and Simply Wall St extrapolates further out, with projected Free Cash Flow for 2028 at CHF 635.0 million and additional estimates running through 2035.

When all of these projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of US$54.30 per share. Against the recent share price of US$39.81, this implies the stock trades at about a 26.7% discount to that intrinsic value, suggesting the market price is below what this cash flow model implies.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests On Holding is undervalued by 26.7%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Approach 2: On Holding Price vs Earnings

For profitable companies, the P/E ratio is a useful way to see how much investors are paying for each dollar of earnings, which makes it a straightforward check on whether the stock looks expensive or cheap relative to its profits.

What counts as a "normal" P/E depends a lot on growth expectations and risk. Higher expected earnings growth or lower perceived risk can support a higher multiple, while slower growth or higher risk usually justifies a lower one.

On Holding currently trades on a P/E of 41.3x. That sits above the Luxury industry average of 22.1x and also above the peer group average of 25.7x, which might initially make the stock look expensive compared with others in its space.

Simply Wall St's Fair Ratio for On Holding is 28.9x. This is a proprietary estimate of what the P/E could be, given factors such as earnings growth, profit margins, risk profile, market cap and its Luxury industry exposure. Because it is tailored to the company, this Fair Ratio can be more informative than a simple comparison with industry or peer averages.

Comparing the current P/E of 41.3x with the Fair Ratio of 28.9x points to the stock trading above that fair level.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your On Holding Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives is a simple tool on Simply Wall St's Community page that lets you set out your own story for a company, link that story to a forecast for revenue, earnings and margins, and then see the Fair Value that results. You can then compare this with the current price and decide whether the stock looks attractive or not, with the whole view updating automatically when new earnings or news arrive.

For On Holding, one investor might lean toward a more optimistic Narrative that aligns with a Fair Value around US$81.43 based on assumed higher revenue growth, margin expansion and a P/E of 39.5x. Another investor might prefer a more cautious Narrative that lines up closer to US$42.09, using different growth and margin assumptions and a P/E of 20.4x. Narratives makes both perspectives transparent so you can see exactly which story you agree with and how that translates into numbers.

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.