ON (NYSE:ONON) Posts Earnings Results, Misses Expectations By $0.07 EPS

ON (NYSE:ONON) announced its quarterly earnings data on Tuesday, August 11th. The company reported $0.35 earnings per share for the quarter, missing the consensus estimate of $0.42 by ($0.07), Briefing.com reports. The company had revenue of $1.05 billion for the quarter, compared to analyst estimates of $1.09 billion. ON had a return on equity of 22.92% and a net margin of 12.09%.ON’s revenue was up 13.5% on a year-over-year basis. During the same period in the prior year, the business earned ($0.09) earnings per share.

Here are the key takeaways from ON’s conference call:

• Q2 net sales rose 21.6% at constant currency to CHF 850 million, led by direct-to-consumer sales, which grew 34.3% and reached 45.7% of total revenue. Growth was broad-based, with particularly strong results in APAC and EMEA.
• Gross margin expanded to 65.4% and adjusted EBITDA margin reached 19.8%, supported by stronger DTC mix, full-price selling, and operating efficiencies. The company raised its full-year gross margin outlook to at least 65% while maintaining its 19.5%-20% adjusted EBITDA margin target.
• Wholesale growth moderated to 12.7% at constant currency, as softer sell-through for everyday running franchises in the promotional Americas market prompted On to reduce sell-in and avoid excess channel inventory. These actions are expected to weigh on Q3 growth, although management characterized the weakness as temporary.
• Management highlighted strong momentum in newer growth engines, including apparel, which grew 56.2% at constant currency, training at 40%, and rapidly expanding tennis and lifestyle franchises. The upcoming product pipeline, including Cloudsurfer 3, new foam technologies, and LightSpray products, is expected to support future full-price demand.
• Full-year constant-currency sales growth guidance was reset to the low 20s, reflecting deliberate wholesale restraint, while management expects continued strong DTC momentum and significant DTC mix expansion in the second half. Inventory rose 31% year over year, primarily due to higher product volumes and foreign-exchange effects.

ON Trading Down 0.4%

NYSE:ONON traded down $0.12 during trading hours on Friday, hitting $30.34. 4,180,741 shares of the stock were exchanged, compared to its average volume of 6,745,198. The company’s 50 day moving average is $31.77 and its two-hundred day moving average is $35.07. The company has a market capitalization of $19.36 billion, a P/E ratio of 20.66, a price-to-earnings-growth ratio of 0.59 and a beta of 2.08. ON has a twelve month low of $26.36 and a twelve month high of $51.08. The company has a quick ratio of 2.25, a current ratio of 2.83 and a debt-to-equity ratio of 0.25.

Wall Street Analyst Weigh In

ONON has been the subject of a number of recent research reports. Weiss Ratings downgraded shares of ON from a “hold (c)” rating to a “hold (c-)” rating in a research report on Tuesday, September 8th. Guggenheim set a $42.00 target price on shares of ON in a report on Friday, September 11th. Morgan Stanley began coverage on shares of ON in a research report on Thursday, September 10th. They issued an “overweight” rating and a $39.00 target price on the stock. Jefferies Financial Group restated an “underperform” rating on shares of ON in a report on Friday, September 18th. Finally, Williams Trading set a $32.00 price target on ON in a report on Tuesday, August 11th. Two equities research analysts have rated the stock with a Strong Buy rating, twenty have issued a Buy rating, four have issued a Hold rating and two have assigned a Sell rating to the company’s stock. According to MarketBeat.com, the company has a consensus rating of “Moderate Buy” and a consensus price target of $43.71.

Insider Buying and Selling

In other ON news, CEO Caspar Coppetti purchased 65,000 shares of the stock in a transaction on Friday, August 14th. The shares were purchased at an average price of $30.67 per share, with a total value of $1,993,550.00. Following the completion of the transaction, the chief executive officer directly owned 2,440,855 shares in the company, valued at $74,861,022.85. This represents a 2.74% increase in their ownership of the stock. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, insider Olivier Bernhard acquired 65,000 shares of the firm’s stock in a transaction on Friday, August 14th. The stock was bought at an average price of $30.67 per share, for a total transaction of $1,993,550.00. Following the completion of the acquisition, the insider owned 5,228,184 shares of the company’s stock, valued at approximately $160,348,403.28. The trade was a 1.26% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. 68.57% of the stock is owned by company insiders.

About ON

On Holding AG, known as On, is a Swiss sportswear company that develops and sells performance footwear, apparel and accessories. The company is particularly recognized for its running shoes, which incorporate proprietary technologies such as CloudTec cushioning and Speedboard components designed to support comfort, responsiveness and energy return.

On serves athletes and consumers across categories including running, outdoor activities, training and everyday performance. Its products are sold through the company’s direct-to-consumer channels, including its website and branded retail stores, as well as through a network of wholesale partners in markets around the world.

On was founded in 2010 in Switzerland by Olivier Bernhard, David Allemann and Caspar Coppetti.