Comparing On Holding and Nike: Which is the Smarter Investment?

On Holding and Nike are two of the most prominent names in the sports industry. While On Holding is a Swiss-based company known for its high-performance running shoes, Nike is a behemoth in the sports apparel industry. With both companies enjoying a steady rise in revenue and market share over the years, investors are often left wondering which is the smarter investment. In this article, we will analyze the fundamentals of both companies and compare them to determine which is a better investment option.

Analyzing the Fundamentals: A Comparison Between On Holding and Nike

Financials

In terms of revenue, Nike dwarfs On Holding. In 2020, Nike reported a revenue of $37.4 billion, while On Holding reported a revenue of $502.7 million. However, On Holding’s revenue has been growing at an impressive rate, with a 75% year-over-year growth in 2020. Additionally, On Holding’s profit margin is higher than Nike’s. On Holding’s net income margin for 2020 was 10.9%, while Nike’s was 7.8%. This indicates that On Holding is more efficient in converting its revenue into profits.

Growth Potential

Nike has a well-established presence in the sports industry, with a strong brand and a vast distribution network. However, On Holding is still a rising star, with a loyal customer base and innovative products. On Holding has been expanding its product range beyond running shoes, venturing into the apparel market. Additionally, On Holding’s partnerships with top athletes and sports teams have been helping it gain traction in the industry. This indicates that On Holding has a high growth potential, especially as it expands into new markets and product categories.

Valuation

On Holding is currently trading at a price-to-earnings (P/E) ratio of 281.7, which is significantly higher than Nike’s P/E ratio of 44.5. This indicates that On Holding’s stock is overvalued, and investors may be paying a premium for its growth potential. However, it is worth noting that On Holding’s high P/E ratio may be justified by its impressive revenue growth and strong profit margins. On the other hand, Nike’s P/E ratio is more in line with industry standards, indicating that it may be a more stable investment option.

In conclusion, both On Holding and Nike are solid investment options, but they offer different pros and cons. Nike has a more established presence in the sports industry and generates more revenue, but its growth potential may be limited. On the other hand, On Holding is a rising star with high growth potential, but its stock may be overvalued. Ultimately, investors will have to consider their investment goals and risk appetite before deciding which company is the smarter investment.