adidas AG (ADS) AI Stock Analysis

• Market Cap: €36.91B
• Dividend Yield: 0.34%
• Average Volume (3M): 682.24K
• Price to Earnings (P/E): 36.1
• Beta (1Y): 1.04
• Revenue Growth: 12.80%
• EPS Growth: 662.68%
• Country: DE
• Employees: 59,030
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Apparel & Luxury
• EPS (TTM): 2.44
• Shares Outstanding: 180,000,000
• 10 Day Avg. Volume: 528,815
• 30 Day Avg. Volume: 682,240
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• 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: €257.83
• Price Target Upside: 24.74% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 24

Adidas AG has a strong financial foundation, characterized by revenue growth and effective cost management. However, the stock faces challenges with its current valuation and technical indicators suggesting potential resistance. The high P/E ratio and low dividend yield further weigh on the score, indicating limited short-term upside.

Positive Factors

Brand Resurgence

The broader resurgence of Adidas's brand suggests an underpinning of support and pricing power for the brand to weather multiple scenarios.

Financial Performance

Management's confidence extended beyond its better than expected Q1 results with FY25 guidance affirmed.

Sales Growth

The adidas brand experienced a 17% currency-neutral sales growth, surpassing the consensus expectation of 15%.

Negative Factors

Production Costs

Increased production costs from the latest US tariff hikes are expected to pressure profit margins and necessitate potential price increases that could deter consumer demand.

Supply Chain Risks

US tariffs on countries other than China carry strong risk as Adidas cannot reorganize strongly its supply-chain that has already been de-risked to China.

Tariff Impacts

Adidas remains a lower margin risk target under US tariff policy which could lead to a sizable cut to consensus EPS estimates across the sector.

adidas AG Business Overview & Revenue Model

Company Description

Adidas designs, develops, produces, and markets athletic and leisure apparel, footwear, accessories, and sports equipment. Its key brands are Adidas and Reebok, and it produces apparel for competitive athletics, casual activewear, and casual fashion. Adidas' fashion brands include Yeezy and Y-3. Adidas sells its products in more than 160 countries through more than 2,500 owned retail stores, 15,000 mono-branded franchise stores, 150,000 wholesale doors, and more than 50 e-commerce sites. The company was founded in 1949 in Germany.

How the Company Makes Money

adidas AG generates revenue through the sale of athletic and casual footwear, apparel, and accessories. Its primary revenue streams include wholesale distribution to retail partners, direct-to-consumer sales via owned retail stores and e-commerce platforms, and licensing agreements. The company's extensive global presence and strong brand equity enable it to capitalize on growing demand for sportswear and lifestyle products. Strategic partnerships and collaborations with athletes, sports teams, and fashion designers further bolster its market position and drive sales. Additionally, adidas invests heavily in marketing and innovation to maintain its competitive edge and appeal to a diverse customer base worldwide.

adidas AG Financial Statement Overview

Summary

Adidas AG exhibits strong financial growth with a solid revenue increase and effective cost management, as indicated by a gross profit margin of 51.0%. However, there is room for improvement in profitability with a net profit margin of 4.2%. The balance sheet is stable, with a manageable debt-to-equity ratio and improved return on equity. Cash flow performance is robust, showcasing effective conversion of earnings into cash flow.

Income Statement

Adidas AG has demonstrated strong revenue growth, with a TTM revenue of €24.38 billion, a 3.6% increase from the previous year. The gross profit margin stands at 51.0% TTM, reflecting effective cost management. However, the net profit margin is relatively modest at 4.2% TTM, indicating room for improvement in profitability. The EBIT and EBITDA margins improved to 6.4% and 11.5% TTM, respectively, highlighting operational efficiency gains.

Balance Sheet

The company's financial stability is solid, with a debt-to-equity ratio of 0.98 TTM, indicating manageable leverage. Return on equity improved to 17.9% TTM, showcasing effective utilization of equity capital. The equity ratio is at 28.4% TTM, suggesting a balanced capital structure. However, improvements in equity growth could further enhance financial resilience.

Cash Flow

Adidas AG's cash flow performance is strong, with a stable operating cash flow of €2.09 billion TTM. The free cash flow to net income ratio is robust at 1.52 TTM, indicating effective cash generation relative to profits. The operating cash flow to net income ratio is 2.05 TTM, showcasing effective conversion of earnings into cash flow. Slight fluctuations in free cash flow growth suggest potential for optimizing capital expenditures.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
23.68B	21.43B	22.51B	21.23B	19.84B
	Gross Profit
12.03B	10.18B	10.64B	10.77B	9.85B
	EBIT
1.34B	268.00M	669.00M	1.99B	751.00M
	EBITDA
2.51B	785.00M	1.75B	3.11B	1.98B
	Net Income Common Stockholders
764.00M	-75.00M	254.00M	1.49B	432.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.48B	1.48B	966.00M	3.94B	4.24B
	Total Assets
20.66B	18.02B	20.30B	22.14B	21.05B
	Total Debt
5.59B	5.56B	6.46B	5.33B	5.89B
	Net Debt
3.46B	4.13B	5.66B	1.50B	1.90B
	Total Liabilities
14.79B	13.10B	14.95B	14.30B	14.36B
	Stockholders Equity
5.48B	4.58B	4.99B	7.52B	6.45B
Cash Flow		Free Cash Flow
2.37B	2.13B	-1.24B	2.52B	1.04B
	Operating Cash Flow
2.91B	2.55B	-543.00M	3.19B	1.49B
	Investing Cash Flow
-356.00M	-450.00M	495.00M	-424.00M	-115.00M
	Financing Cash Flow
-1.56B	-1.43B	-2.96B	-2.99B	479.00M

adidas AG Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 206.70
• 50DMA: Negative
• 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 Negative. The current price of 206.7 is above the 20-day moving average (MA) of 202.41, below the 50-day MA of 220.14, and below the 200-day MA of 228.44, indicating a neutral trend. The MACD of -2.54 indicates Negative momentum. The RSI at 47.00 is Neutral, neither overbought nor oversold. The STOCH value of 46.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:ADS.

adidas AG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TUI1	70 Outperform	€3.52B	6.47	58.94%	―	11.87%	4.42%
ADS	68 Neutral	€36.91B	36.11	19.28%	0.34%	12.80%	662.68%
Sector *	61 Neutral	$6.65B	11.64	3.00%	3.98%	2.61%	-21.41%