As 2025 has been a tough year for On Holding AG (ONON) investors, the latest Q3 results finally brought a sense of hope that things may be shifting heading into 2026. To be fair, this hasn’t been a great year for premium consumer and discretionary retail stocks overall—only a handful have managed to avoid underperformance.
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Concerns about a potential U.S. consumption slowdown, a rotation into more inflation-resilient sectors, tariff frictions, and broad competitive pressure across the apparel and footwear industries all weighed on On Holding’s stock. And importantly, this happened not because the company’s fundamentals had weakened, but mainly because expectations for future growth had been reset.
Still, Q3 was a breath of fresh air for the market. The Americas segment posted sales growth well above the feared low-20s range, and the company delivered margin expansion alongside strong global consolidated growth—a combination investors had been waiting for.
Even though the stock remains at depressed levels relative to early 2025, ONON is hardly “cheap.” But once the premium valuation is adjusted for its multi-year growth profile, the setup starts to look much more balanced. That’s why I see this as a constructive moment to lean bullish and assign a Buy rating on the Swiss athletic footwear and apparel company’s shares.
ONON’s Growth Momentum Remains Intact
When I look at On Holding’s investment case, the three pillars I focus on are simple: growth, margins, and efficiency. Despite operating in a tough global backdrop for apparel retailers, On is still delivering strong top-line growth—and, importantly, accelerating in constant currency.
In the latest quarter (Q3 2025), sales reached $998 million, up 24.9% YoY, or 34.5%. This momentum has been remarkably consistent throughout the year: over the last nine months, revenue grew 32.6% YoY, or 37.3% in constant currency—which, for a premium-consumption brand, is basically “hyper-growth.”
The Asia-Pacific (APAC) region has been the standout growth driver of the thesis. It posted triple-digit growth over the last nine months (115.3% YoY in constant currency), reinforcing the idea that On is still in the early innings of market penetration there, with a massive runway ahead.
But the real surprise of the quarter came from the Americas, the company’s most important market. Sales in the region grew 21% YoY in constant currency—a strong print given the market’s skepticism around U.S. consumer softness and intensifying competition from Nike (NKE) and Deckers Outdoor (DECK).
The sales mix also remains very healthy. Wholesale revenue grew 32.5% YoY in Q3, while direct-to-consumer (DTC)—the highest-margin channel—grew even faster at 37.5% YoY in constant currency. This strengthens the narrative that On’s brand equity is rising and that it’s increasingly able to capture demand directly, without relying as heavily on retailers.
Profitability Scales Faster Than Expected
And speaking of margins, the standout on the bottom line has been gross margin expansion. In Q3, gross margin reached 65.7%, a sharp improvement from 60.6% in the same quarter last year. Over the first nine months of 2025, the gross margin was 62.5%, also significantly above the 60.1% recorded in the comparable period of 2024. For a premium retail brand, this is a significant level of expansion.
EBITDA performance tells a similar story. In Q3, adjusted EBITDA margin rose to 22.6%, up from 18.9% a year ago—another strong sign of improving profitability. Management’s guidance for full-year 2025 also reinforces this trend. The company now expects constant-currency revenue growth of 34% YoY (up from 31%) and a gross margin of 62.5% (previously guided to 60.5%–61%).
If On Holding delivers another margin beat and guides higher again, this becomes a textbook beat-and-raise story for profitability. Expanding margins while growing this quickly—when growth typically dilutes margins—suggests management sees not just short-term leverage, but sustained improvement for the full year.
A Premium Multiple That’s Cheaper Than It Looks
It’s no surprise that a retailer able to expand both mix and margins while also raising full-year targets ends up trading at a premium valuation. Currently, On Holding trades at 52x earnings, or 48x forward earnings, based on the Street’s $0.92 EPS estimate for FY2025. This is well above the multiples of its closest peers, although still below ONON’s own three-year historical average—largely a reflection of the stock’s disappointing performance throughout 2025.
The key point is that examining ONON solely through a short-term P/E lens leads to distorted conclusions. By adjusting the forward earnings multiple to the company’s three-to-five-year growth outlook—with the market pricing in a 24.2% EPS CAGR—investors get a PEG of 1.91. That’s cheaper than all the peers mentioned earlier, except Adidas (ADDYY), which trades at a PEG of 0.6.
I would also highlight that On Holding’s recent bottom-line delivery came in well ahead of expectations. FY2025 EPS estimates have been revised up to $0.92, compared to $0.77 before Q3—a major upward reset. This creates room for the re-rating that ONON “deserves,” especially after reaching such depressed valuation levels heading into the quarter.
Is ONON a Buy, Hold, or Sell?
The consensus among analysts on On Holding is broadly bullish. Of the 20 ratings issued over the past three months, 18 are Buys, with just one Hold and one Sell. The average price target of $60.78 implies roughly 38% upside from current levels.
A Strong Q3 Sets the Stage for a Re-Rating
On Holding has demonstrated to the market that it’s firmly on the right track and is arguably one of the few premium athletic and lifestyle brands—if not the standout—managing to grow sales at a rapid pace without sacrificing margins, thereby reinforcing the story of sustained operational leverage. Q3 results came in well above what investors feared, and the upward revision to full-year 2025 guidance provided the confidence the stock needed for a re-rating, even if that recovery has only partially offset this year’s weak share performance.
With growth, margins, and efficiency all trending in the right direction, I view the current setup as constructive for ONON and maintain a Buy rating at these levels.