adidas AG (ADS) AI Stock Analysis

• Market Cap: €28.04B
• Dividend Yield: 1.22%
• Average Volume (3M): 481.99K
• Price to Earnings (P/E): 23.0
• Beta (1Y): 1.12
• Revenue Growth: 9.64%
• EPS Growth: 187.42%
• Country: DE
• Employees: 46,045
• Sector: General
• Sector Strength: N/A
• Industry: Apparel - Footwear & Accessories
• EPS (TTM): 2.57
• Shares Outstanding: 180,000,000
• 10 Day Avg. Volume: 411,656
• 30 Day Avg. Volume: 481,994
• PEG Ratio: -0.05
• Price to Book (P/B): 7.72
• Price to Sales (P/S): 1.79
• P/FCF Ratio: 17.84
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €225.68
• Price Target Upside: 42.30% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 13
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 61 Neutral
• Price Target: €151.00 ▼(-4.79% Downside)
• Action: Reiterated Date: 01/13/26
• Date: Action: Reiterated 01/13/26

The score is driven mainly by improving profitability and stabilizing leverage, but is held back by a sharp deterioration in TTM operating/free cash flow and weaker cash conversion versus earnings. Technicals are broadly neutral with the stock below longer-term moving averages, and valuation is somewhat elevated (P/E ~24.4) with a modest dividend yield (~1.2%).

Positive Factors

Revenue & margin recovery

TTM revenue growth alongside a meaningful operating margin rebound to ~8% signals a sustainable recovery in core profitability. Durable demand and margin leverage can support reinvestment and operational resilience across cycles, strengthening long-term earnings power.

Diversified, high‑quality distribution

A diversified channel mix (wholesale, DTC, e-commerce) and a footwear-led portfolio provide durable revenue resilience and margin optionality. Control over DTC and digital channels supports customer data, pricing power, and long-term brand monetization versus pure wholesale exposure.

Improved leverage and strong ROE

Declining leverage and low‑20% ROE reflect stronger capital efficiency and profitability. This enhanced balance sheet flexibility supports strategic investment and risk absorption over the medium term, reducing the likelihood of forced deleveraging under moderate stress.

Negative Factors

Weak cash conversion

Sharp deterioration in operating and free cash flow versus earnings raises quality‑of‑earnings concerns and limits durable internal funding for capex, inventory and payouts. Persistent cash conversion weakness could constrain long‑term strategic flexibility and capital allocation.

Balance sheet more levered than best practice

Although leverage has improved, debt remains elevated versus the firm's best historical levels. A higher structural leverage position reduces financial runway in tougher cycles and increases exposure to interest and refinancing risk over the medium term.

Incomplete margin recovery vs prior peak

Net margins remain below prior cycle highs, indicating the earnings recovery is not fully restored. Structural margin headwinds or mix shifts could keep profits below peak, limiting durable cash generation and leaving earnings sensitive to cyclical or competitive pressures.

adidas AG Business Overview & Revenue Model

Company Description

adidas 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 Money

adidas AG generates revenue primarily through the sale of its products across various channels, including wholesale, direct-to-consumer (DTC), and e-commerce. The wholesale segment involves selling products to retailers, while the DTC segment includes sales through adidas-owned stores and online platforms. Key revenue streams include the sales of footwear, which accounts for a significant portion of total revenue, followed by apparel and accessories. The company also benefits from licensing agreements and collaborations with other brands and designers, which enhance its product offerings and market reach. Strategic partnerships with athletes and sports teams further bolster the brand's visibility and sales. Additionally, adidas invests in marketing campaigns and sponsorships to drive consumer engagement and brand loyalty, contributing to its overall earnings.

adidas AG Financial Statement Overview

Summary

Income statement trends are constructive (TTM revenue growth and margin rebound; operating margin ~8% vs ~1% in 2023), and leverage has improved from 2022–2023 with strong ROE. The major offset is weak cash conversion in TTM, with operating cash flow down to ~0.9B and free cash flow ~0.4B, materially below recent years and below net income.

Income Statement

Profitability has improved meaningfully versus 2023, with TTM (Trailing-Twelve-Months) revenue up strongly and margins rebounding (about 51% gross margin and ~5% net margin). Operating profitability is also firmer (roughly 8% operating margin in TTM vs ~1% in 2023). The main weakness is that net margins remain well below the 2021 peak (~7%), highlighting a still-incomplete earnings recovery and some volatility across cycles.

Balance Sheet

Leverage looks manageable but not light: debt sits around 1.0x equity in TTM (improved from ~1.2–1.3x in 2022–2023, but higher than ~0.7x in 2021). Equity has rebuilt from the 2023 trough, and returns on equity are strong in TTM (low-20%s), signaling better profitability. The trade-off is a balance sheet that remains more levered than its best historical positioning, leaving less cushion if operating conditions soften.

Cash Flow

Cash generation weakened sharply in TTM (Trailing-Twelve-Months): operating cash flow fell to about 0.9B and free cash flow to ~0.4B, with free cash flow down materially from 2024. Cash conversion is the key concern—free cash flow is well below net income in TTM, contrasting with 2023–2024 when free cash flow was strong relative to earnings. The positive is that free cash flow remains positive in TTM, but volatility in cash conversion raises quality-of-earnings risk.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	24.70B	23.68B	21.43B	22.51B	21.23B	19.84B
Gross Profit	12.69B	12.03B	10.18B	10.64B	10.77B	9.85B
EBITDA	3.08B	2.51B	785.00M	1.75B	3.11B	1.98B
Net Income	1.22B	764.00M	-75.00M	254.00M	1.49B	432.00M
Balance Sheet
Total Assets	20.15B	20.66B	18.02B	20.30B	22.14B	21.05B
Cash, Cash Equivalents and Short-Term Investments	1.70B	2.48B	1.48B	966.00M	3.94B	4.24B
Total Debt	5.43B	5.59B	5.56B	6.46B	5.33B	5.89B
Total Liabilities	14.07B	14.79B	13.10B	14.95B	14.30B	14.36B
Stockholders Equity	5.70B	5.48B	4.58B	4.99B	7.52B	6.45B
Cash Flow
Free Cash Flow	379.00M	2.37B	2.13B	-1.24B	2.52B	1.04B
Operating Cash Flow	911.00M	2.91B	2.55B	-543.00M	3.19B	1.49B
Investing Cash Flow	-342.00M	-356.00M	-450.00M	495.00M	-424.00M	-115.00M
Financing Cash Flow	-1.27B	-1.56B	-1.43B	-2.96B	-2.99B	479.00M

adidas AG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 158.60
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:ADS, the sentiment is Positive. The current price of 158.6 is above the 20-day moving average (MA) of 152.60, above the 50-day MA of 158.45, and below the 200-day MA of 178.21, indicating a neutral trend. The MACD of 0.35 indicates Negative momentum. The RSI at 57.09 is Neutral, neither overbought nor oversold. The STOCH value of 62.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:ADS.

adidas AG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PUM	71 Outperform	€3.47B	-11.92	-12.22%	2.83%	-2.90%	-211.60%
BOSS	68 Neutral	€2.54B	11.34	16.27%	3.86%	0.09%	4.22%
ADS	61 Neutral	€28.04B	23.01	22.32%	1.22%	9.64%	187.42%
ZAL	61 Neutral	€5.49B	22.63	9.04%	―	12.06%	18.20%
Sector *	55 Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
DHER	50 Neutral	€6.47B	-10.69	-32.53%	―	23.23%	76.05%