• If you are wondering whether On Holding's share price still reflects its true worth, you are not alone. This article will help you frame that question in a structured way.
• The stock most recently closed at US$49.42, with returns of 9.1% over the past 7 days, 7.5% over 30 days, 5.3% year to date, 2.0% over 1 year and a very large 3 year return of 139.0%.
• Recent coverage has focused on On Holding as a fast growing athletic footwear brand and on how its products are gaining visibility with runners and lifestyle consumers. This helps explain why investors are paying close attention at current price levels. This broader interest in the brand gives context to recent share price moves and sets up an important question about what is already reflected in the valuation.
• On our checks, On Holding scores 1 out of 6 on potential undervaluation. We will look at standard valuation tools like multiples and cash flow models, then finish by showing you a more holistic way to think about what the market might be pricing in.

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 DCF model takes estimates of the cash a company could generate in the future and then discounts those cash flows back to what they might be worth in today’s money.

For On Holding, the latest twelve month Free Cash Flow is CHF 331.7 million. Analyst estimates and subsequent extrapolations point to Free Cash Flow of CHF 384.3 million in 2026, CHF 499.7 million in 2027 and CHF 605.0 million in 2028. Simply Wall St then extends those projections out to 2035, with each future cash flow discounted back using a 2 Stage Free Cash Flow to Equity model.

Adding those discounted cash flows together results in an estimated intrinsic value of US$51.30 per share, compared with the recent share price of US$49.42. That indicates the stock trades at roughly a 3.7% discount to this DCF estimate, which is a relatively small gap.

In other words, based on this DCF view, On Holding appears close to fairly priced with a slight lean toward being cheap.

Result: ABOUT RIGHT

On Holding is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: On Holding Price vs Earnings

For a profitable business like On Holding, the P/E ratio is a useful shorthand because it connects what you pay for each share with the earnings that support that share. It is a quick way to see how much the market is willing to pay for the company’s current profit stream.

What counts as a “normal” P/E depends on what investors expect for future growth and how risky they think those earnings are. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually points to a lower one.

On Holding currently trades on a P/E of 56.98x. This is well above the Luxury industry average of 21.49x and above the peer group average of 30.73x. Simply Wall St’s Fair Ratio for On Holding is 26.71x. This is its proprietary view of what the P/E might be given factors like earnings growth, profit margins, industry, market cap and specific risks. This Fair Ratio can be more informative than a straight comparison with peers or the industry because it adjusts for those company specific drivers. With the current P/E of 56.98x versus a Fair Ratio of 26.71x, the shares screen as expensive on this metric.

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. These are simply your story about a company tied directly to your own assumptions for future revenue, earnings, margins and fair value. On Simply Wall St these sit in the Community page, where millions of investors can see how a company’s story links to a financial forecast and then to a fair value that can be compared with the current share price to frame buy or sell decisions. Narratives update automatically when fresh news or earnings land, and they can span very different views. For example, one On Holding Narrative points to a Fair Value of US$42.09 and another points to US$81.43, giving you a clear sense of how bullish or cautious different investors are about the same stock.

For On Holding however we will make it really easy for you with previews of two leading On Holding Narratives:

Fair value in this bullish narrative: CHF 61.90

Implied discount to this fair value at the recent US$49.42 close: about 20% below the narrative fair value, using the stated CHF 61.90 estimate and the latest CHF based fair value context.

Revenue growth assumption used in this narrative: 21.90% per year

• Leans on direct to consumer and e commerce growth, product diversification and automated manufacturing to support higher profitability and scalability.
• Assumes revenue growth of around 22.9% a year, margin expansion from 5.0% to 11.1% in three years and earnings reaching CHF 561.2m by about 2028.
• Ties these forecasts to an analyst consensus price target of CHF 65.86, with room for different views across a wide target range that investors are encouraged to test against their own assumptions.

Fair value in this bearish narrative: US$42.09

Implied premium to this fair value at the recent US$49.42 close: about 17% above the narrative fair value using ((49.42 minus 42.09) divided by 42.09).

Revenue growth assumption used in this narrative: 23.25% per year

• Focuses on execution risk around new technologies, premium pricing and rapid international and apparel expansion, with concern that expectations leave little room for missteps.
• Builds in revenue growth of 23.2% a year, margin expansion from 7.8% to 13.4% by about 2029 and earnings of CHF 723.0m, paired with a lower future P/E of 20.4x.
• Arrives at a fair value of US$42.09, below the current share price, and frames this as consistent with the more cautious end of the analyst target range that investors can use as a reference point when testing their own view.

If you want to go beyond the snapshots here and see how these bullish and bearish views are built line by line, Curious how numbers become stories that shape markets? Explore Community Narratives on Simply Wall St and compare the assumptions with your own.

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.