Welcome to Extreme Investor Network, where we provide you with unique and insightful information on investing and market trends. Today, let’s dive into an update on a breakout shoemaker that is giving Nike a run for its money.
In a previous article, we mentioned On Holding AG (ONON) ahead of its earnings with a buy recommendation. The earnings report exceeded expectations, resulting in the stock rallying over 40%. As we anticipate the next quarter’s earnings and the upcoming summer Olympics where top shoe brands will be featured, we see potential for ONON to continue its growth trajectory. We also have our eyes on another footwear name in our growth portfolios, Deckers Outdoor (DECK), as we believe both companies are set to capture market share from Nike (NKE) in the coming quarters.
Taking a closer look at the ONON weekly chart, we observe a significant pop in the stock following the earnings report above the 2023 highs. This level now acts as a key support level, indicating a bullish trend. Additionally, the volume spike during the earnings further reinforces this observation. When comparing ONON to Nike in a ratio chart, we see ONON’s consistent outperformance to the shoe giant.
Analyzing the performance of Nike relative to other companies in the footwear sub-industry group, we note Nike’s -12.64% performance in the prior 12 months compared to ONON’s +18.24% and DECK’s +85.80%. The underperformance of Nike is attributed to valuation and lack of innovation. While Nike is trading at around 26 times 2024 expected earnings, ONON and DECK trade at higher forward PEs, but exhibit stronger revenue growth.
ONON and DECK’s rapid revenue growth, particularly in the running space, positions them as strong contenders against Nike. With ONON’s recent launch of tennis shoes endorsed by Roger Federer, they are poised to make gains in this market segment as well. Despite being above the 2023 breakout level, we remain optimistic about ONON’s potential to reach all-time highs.
As always, it’s important to conduct thorough research and consult with a financial advisor before making investment decisions. Stay tuned to Extreme Investor Network for more in-depth analysis and unique insights into the world of investing.
Disclaimer: The opinions expressed in this article are solely those of the author and do not reflect the opinions of Extreme Investor Network or its affiliates. Make sure to review our full disclaimer for more information.