On Holding AG (ONON): what the price requires
At today's price, On Holding AG (ONON) is priced for today's economics sustained for ~12.0 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ONON
Headline
| Field | Value |
|---|---|
| Ticker | ONON |
| Company | On Holding AG |
| Current price | $38.04/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 9.1% |
| Operating margin today | 10.0% |
| Margin compression implied | -0.9pp |
| Must persist for | 12.0y |
| Multiple paid | 39x operating income |
The operating-margin requirement is derived from the framework's value band at year 4, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.2% cost of capital; growth searched up to the 27.6% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.
Reconcile: at the x-ray's 9.3% required return this reads ~7 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.31σ |
| sustained it ~10 years at this level | 11% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.86x | 4 | expensive |
| Earnings | 3.16x | 2 | expensive |
| Relative | 1.32x | 3 | expensive |
| Growth | 0.75x | 3 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $50.59 | 0.75x | yes | FCF base $0.4B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.3%, 7yr projection |
| DCF Exit Multiple | Growth | $46.57 | 0.82x | yes | Exit EV/EBITDA: 20.7x / 23.7x / 26.7x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $28.84 | 1.32x | yes | P/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $8.43 | 4.51x | yes | BV/sh $6.25, ROE (TTM) 12.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $9.72 | 3.91x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $55.20 | 0.69x | yes | Rev $3.4B, growth 30% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.3x / 4.0x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $9.76 | 3.90x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.16B × (1−1%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | $9.99 | 3.81x | yes | BV $6.25 + 5yr PV of (ROE (TTM) 12.5% − Kₑ 9.3%) × BV; BV grows 8.1%/yr |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $21.22 | 1.79x | yes | EBITDA $0.43B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $15.76 | 2.41x | yes | FCF $325.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $41.27 | 0.92x | yes | BV $6.25 × (ROIC 61.1% / WACC 9.3%) |
| P/Sales Sector | Relative | $28.84 | 1.32x | yes | Revenue $3.42B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $1.3b |
| Net debt / NOPAT (after-tax) | -4.99x (net cash) |
| Net debt / operating income (pre-tax) | -4.96x (net cash) |
| Interest coverage | 12.1x |
| Burning cash | no |
Bullet Takeaways
What the static valuation models miss about On is the brand. They read a 10.2% trailing operating margin and a 40x earnings base and call the price rich. What they cannot price is a premium performance brand compounding revenue above 20% with a 64% gross margin and a return on invested capital near 28%.
Only the growth-DCF reaches the price. Asset, earnings-power and peer-multiple methods all land below $38.87; the bet is on durable compounding the static frames structurally cannot capture. Backing the price out implies sustaining high growth for about 12 years.
The balance sheet is pristine: roughly CHF 1.26 billion in cash, no debt, and interest coverage above 12x. There is no financial risk in the story. The question is whether the brand momentum, real and accelerating in Q1 2026, justifies a price that every method except the growth one says is full.
Bull Case
The bull case starts with what the spreadsheets cannot see. Run On through the standard valuation toolkit and it looks expensive: a trailing operating margin around 10.2% and a price near forty times that earnings base. But that toolkit is built to value steady-state businesses, and On is not one. It is a premium athletic brand in the steep early part of its global expansion, and the gap between what the numbers show and what the business is doing is the entire opportunity. The static frames measure today's profit; the brand is building tomorrow's.
The most recent quarter shows why the static read understates the business. Q1 2026 net sales rose 14.5% to CHF 831.9 million, or 26.4% in constant currency, with double-digit growth across wholesale, direct-to-consumer and every region. Gross margin expanded to 64.2% from 59.9%, adjusted EBITDA margin jumped to 21.0% from 16.5%, and net income grew 82.2% to CHF 103.3 million. The category mix is the tell: shoes grew 24%, apparel 57.5%, and accessories 86.6% in constant currency. A footwear brand successfully extending into apparel and accessories at those rates is proving it is a brand, not a single hit product, and brand extension is precisely the high-margin, capital-light growth that compounds.
The economics underneath are excellent. Return on invested capital sits near 28%, the balance sheet carries roughly CHF 1.26 billion in cash with no debt, and interest coverage is above 12x. On can self-fund its expansion, its stores, its marketing and its product development without leverage. Management reiterated guidance for at least 23% constant-currency sales growth in 2026 and raised the gross-margin and EBITDA-margin outlook. A debt-free brand growing north of 20% with a 64% gross margin and high returns on capital is the kind of durable compounder that justifies a premium, because the value is in the years of high-return reinvestment ahead, not in the trailing margin the static methods anchor on.
Bear Case
Frame the bear case around the disagreement between the valuation methods, because that disagreement is the warning. Only one family of methods, the growth-DCF, reaches the price. The asset-based methods value On at well under half the price, the earnings-power methods at roughly a third, and the peer-multiple methods below the price as well. When three of four method families say a stock is richly valued and only the most assumption-dependent one supports it, the conservative methods are usually the more honest read. The growth-DCF reaches the price only by extrapolating the current high growth and high returns far into the future; the static methods reach a lower number because they price what the company has actually earned.
The reason that disagreement matters is that On is a consumer brand, and consumer brands are mortal. The current numbers are extraordinary, but they reflect a brand at peak heat. The 24% shoe growth, 57% apparel growth and 86% accessories growth are the kind of rates that pull future demand forward and that competition, fashion cycles and the law of large numbers eventually slow. The price embeds a roughly 12-year duration of sustained high compounding, and the rarity check trips on the fade assumption, meaning that persistence is above the base rate. Premium athletic is a crowded, well-capitalized field; staying culturally relevant for a decade is far from guaranteed.
The valuation leaves no cushion for the inevitable deceleration. Trailing operating margin is 10.2%, and even with the strong EBITDA-margin trajectory, the price assumes both the growth and the margin expansion continue for years. If constant-currency growth slows from the mid-20s toward the teens, or if the apparel push stumbles, the growth-DCF that currently reaches the price would no longer do so, and the stock would re-rate toward the static methods, which sit well below today's level. The balance sheet is flawless and the brand is real, but a flawless brand priced for a dozen years of uninterrupted compounding is a bet on durability that the conservative methods are explicitly declining to make.
Valuation
On's valuation is a clean example of method disagreement carrying the signal. Only the growth-DCF family reaches the price: DCF perpetual growth near $51, DCF exit multiple near $47, and a discounted future market cap near $56 all clear $38.87 (June 27, 2026). Every other family sits below. The asset-based methods, excess-return and residual-income, land near $8 to $10. The earnings-power methods land near $10 to $16. The peer-multiple and relative methods cluster near $21 to $29. The blended central estimate is near $29, below the price. The characterization is direct: asset, earnings-power and peer-multiple models all say richly valued, and only the growth-DCF reaches the price, so the bet is on durable compounding the static frames cannot price.
The inversion puts a horizon on that bet. With a current operating margin around 10.2% and a return on invested capital near 28%, backing out the price implies sustaining high-end growth for about 12.3 years. The rarity assessment is elevated with the fade check tripped, flagging that maintaining those returns that long is above the base rate. This is a moat-and-durability valuation: the price is reasonable only if On's brand strength translates into a decade-plus of high-return reinvestment, which is an assumption about competitive position, not a number on the current income statement.
The balance sheet supports the quality of the business but not the price directly. Roughly CHF 1.26 billion in cash, no debt and interest coverage above 12x mean On can fund its growth internally with no financial risk, which is a genuine strength and part of why a premium is defensible. What the cash cannot do is shorten the 12-year duration the price requires or guarantee the brand stays hot. The methods are not saying On is a poor business, the opposite, they are saying the price already pays for a long runway of flawless compounding. Whether that price is justified comes down to conviction in the brand's durability, the one input the static frames deliberately refuse to assume.
Catalysts
On reported Q1 2026 on May 12, 2026, with net sales up 14.5% to CHF 831.9 million, or 26.4% in constant currency, crossing CHF 800 million in a quarter for the first time, gross margin up to 64.2%, adjusted EBITDA margin up to 21.0%, and net income up 82.2% to CHF 103.3 million (On press release). Category growth was led by apparel up 57.5% and accessories up 86.6% in constant currency, alongside shoes up 24.0% (StockTitan).
The catalysts ahead are growth durability and margin. Management reiterated guidance of at least 23% constant-currency net sales growth for 2026 and raised the gross-margin outlook to at least 64.5% and the adjusted EBITDA-margin outlook, with DTC, APAC and apparel expected to outperform (CNBC). Watch three things over the coming quarters: whether constant-currency growth holds in the low-to-mid 20s rather than decelerating, whether the apparel and accessories expansion keeps proving the brand extends beyond footwear, and whether the EBITDA margin keeps climbing toward and past 20%. Sustained 20%-plus growth with expanding margin would support the durability the price assumes; a slowdown toward the teens or a margin stall would pull the stock back toward the static valuation methods, which all sit below the current price. Currency will also move reported results, since On reports in Swiss francs.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- DECK (DECKERS OUTDOOR CORP)
- (no filing in the citation store)
- NKE (NIKE, Inc.)
- (no filing in the citation store)
- CROX (CROCS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.