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Adidas (ADDYY)
OTHER OTC:ADDYY

Adidas (ADDYY) AI Stock Analysis

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Adidas

(OTC:ADDYY)

Rating:75Outperform
Price Target:
$132.00
▲(7.13%Upside)
Adidas' overall stock score reflects strong financial recovery, effective management, and positive earnings guidance, balanced by valuation concerns and external challenges such as tariffs. The company's solid operational performance and strategic focus on growth provide a strong foundation, though market valuation appears stretched given the current P/E ratio.

Adidas (ADDYY) vs. SPDR S&P 500 ETF (SPY)

Adidas Business Overview & Revenue Model

Company Descriptionadidas AG, together with its subsidiaries, designs, develops, distributes, and markets athletic and sports lifestyle products worldwide. It offers footwear; apparel; and accessories and gear, such as bags and balls under the adidas brand. It sells its products through approximately 2,200 own-retail stores; mono-branded franchise stores and shop-in-shops; and wholesale and its e-commerce channels. The company was formerly known as adidas-Salomon AG and changed its name to adidas AG in June 2006. adidas AG was founded in 1920 and is headquartered in Herzogenaurach, Germany.
How the Company Makes MoneyAdidas generates revenue primarily through the sale of its sportswear and lifestyle products. The company's key revenue streams include its wholesale business, which involves selling products to retailers worldwide, and its direct-to-consumer business, comprising sales through company-owned retail stores and e-commerce platforms. Adidas also benefits from strategic collaborations and partnerships with high-profile athletes, sports teams, and fashion designers, which enhance brand visibility and drive sales. Sponsorship deals and licensing agreements further contribute to its earnings by expanding its brand presence across different markets.

Adidas Earnings Call Summary

Earnings Call Date:Apr 29, 2025
(Q1-2025)
|
% Change Since: 0.24%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Adidas demonstrated strong financial performance and growth across most markets, driven by effective inventory management and operational efficiency. However, challenges such as increased US tariffs and e-commerce sales decline present potential headwinds. While the company is confident in meeting its 2025 guidance, the impact of tariffs remains a significant uncertainty.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Adidas reported a 13% increase in currency-neutral net sales, and 17% when excluding YEEZY. Gross profit improved more than 52%, and EBIT reached €610 million, reflecting a 400 basis point improvement.
Geographical Sales Growth
All markets reported growth: North America up 13%, Europe 16%, Greater China 14%, and LatAm 27%. Adidas brand sales up 17% excluding YEEZY.
Inventory Management
Inventory up 15% to €5.1 billion, with a significant portion of fresh products, reflecting better planning and demand management.
Operating Leverage
Operating overheads grew only 3% despite a 30% currency-neutral growth, reflecting better operational efficiency.
Negative Updates
US Tariff Challenges
Adidas faces increased tariffs on imports to the US, which could impact profitability if duties remain or increase after the current 90-day suspension period.
E-commerce Downturn
E-commerce sales were down 3% due to the absence of YEEZY, although Adidas brand sales excluding YEEZY grew by 18%.
Potential Pricing Pressure
Adidas may need to adjust prices in the US market to offset increased tariff costs, which could affect consumer demand.
Company Guidance
During the adidas AG Q1 2025 Conference Call, the company reported strong financial performance, exceeding expectations with net sales growing 13% currency-neutral and 17% for the adidas brand excluding YEEZY. Gross profit rose over 52%, reflecting a 100 basis point improvement, and the operating profit reached €610 million, representing an almost 400 basis point improvement, nearing their 10% EBIT target. Regionally, North America sales grew 13% for the adidas brand, Europe by 16%, Greater China by 14%, Japan and Korea achieved growth despite challenges, and Latin America and emerging markets saw robust double-digit growth at 27% and 25% respectively. Footwear led category growth at 17%, with apparel nearly reaching double-digit growth, and accessories up 10%. The company remains focused on localizing strategy and maintaining momentum amid challenges such as U.S. tariffs, with expectations of continued double-digit growth excluding YEEZY and a confirmed EBIT guidance of €1.7 billion to €1.8 billion.

Adidas Financial Statement Overview

Summary
Adidas shows a strong financial recovery and growth trajectory with improved profitability margins and robust cash flow management. The company has effectively managed its debt levels, maintaining a balanced financial structure. However, attention to maintaining cash flow momentum and further strengthening its equity position could bolster long-term financial health.
Income Statement
82
Very Positive
Adidas has demonstrated strong revenue growth of 13.75% from 2023 to TTM (Trailing-Twelve-Months) and a net profit margin improvement to 4.19% in TTM, indicating enhanced profitability. The gross profit margin remained robust at 51.0% in TTM, highlighting effective cost management. The EBIT margin of 6.61% and EBITDA margin of 11.51% in TTM further confirm operational efficiency. However, the company faced a challenging period in 2023 with a negative net income, but has since recovered well.
Balance Sheet
75
Positive
Adidas maintains a moderate debt-to-equity ratio of 0.97 in TTM, reflecting a balanced approach to leverage. The equity ratio stands at 28.44%, indicating a stable financial structure. Return on equity improved significantly to 17.89% in TTM, showcasing enhanced shareholder returns. Despite these strengths, there is room for improvement in equity growth and further reduction of liabilities to enhance financial stability.
Cash Flow
78
Positive
Adidas exhibits strong cash flow management with a free cash flow to net income ratio of 1.52 in TTM, demonstrating efficient conversion of earnings into cash. The operating cash flow to net income ratio of 2.05 in TTM further underlines robust cash generation capacity. However, the free cash flow decreased by 34.36% compared to the previous year, suggesting potential challenges in sustaining cash flow momentum.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
24.38B23.68B21.43B22.51B21.23B19.84B
Gross Profit
12.43B12.03B10.18B10.64B10.77B9.85B
EBIT
1.59B1.34B268.00M669.00M1.99B751.00M
EBITDA
2.81B2.51B1.44B1.90B3.11B2.08B
Net Income Common Stockholders
1.02B764.00M-75.00M254.00M1.49B432.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.11B2.48B1.48B966.00M3.94B4.24B
Total Assets
20.09B20.66B18.02B20.30B22.14B21.05B
Total Debt
5.57B5.59B5.56B6.46B5.33B5.89B
Net Debt
4.14B3.46B4.13B5.66B1.50B1.90B
Total Liabilities
14.00B14.79B13.10B14.95B14.30B14.36B
Stockholders Equity
5.71B5.48B4.58B4.99B7.52B6.45B
Cash FlowFree Cash Flow
1.56B2.37B2.13B-1.24B2.52B1.04B
Operating Cash Flow
2.09B2.91B2.63B-543.00M3.19B1.49B
Investing Cash Flow
-235.00M-356.00M-451.00M495.00M-424.00M-115.00M
Financing Cash Flow
-1.18B-1.56B-1.43B-2.96B-2.99B479.00M

Adidas Technical Analysis

Technical Analysis Sentiment
Positive
Last Price123.21
Price Trends
50DMA
117.58
Positive
100DMA
122.59
Positive
200DMA
122.06
Positive
Market Momentum
MACD
1.80
Positive
RSI
54.27
Neutral
STOCH
76.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADDYY, the sentiment is Positive. The current price of 123.21 is above the 20-day moving average (MA) of 122.03, above the 50-day MA of 117.58, and above the 200-day MA of 122.06, indicating a bullish trend. The MACD of 1.80 indicates Positive momentum. The RSI at 54.27 is Neutral, neither overbought nor oversold. The STOCH value of 76.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ADDYY.

Adidas Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$15.69B16.7141.82%16.22%29.52%
76
Outperform
$10.25B37.959.35%18.55%147.70%
75
Outperform
$44.34B40.4819.21%0.63%11.69%632.93%
73
Outperform
$5.69B6.2253.70%2.09%26.18%
SKSKX
72
Outperform
$9.28B14.9214.67%10.66%9.44%
NKNKE
69
Neutral
$90.88B20.4931.93%2.50%-7.11%-12.12%
62
Neutral
$6.90B11.242.93%3.89%2.68%-24.71%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ADDYY
Adidas
123.21
-1.90
-1.52%
CROX
Crocs
102.17
-45.84
-30.97%
DECK
Deckers Outdoor
105.83
-76.38
-41.92%
NKE
Nike
62.37
-29.97
-32.46%
SKX
Skechers USA
62.00
-8.80
-12.43%
BIRK
Birkenstock Holding plc
55.20
-4.09
-6.90%
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.