When running seeks momentum as earnings, revenue results diverge

on hold (Onon), the parent company behind Swiss shoemaker On Run, released its second-quarter results early Tuesday. ONON stock rose 101% in 2023 prior to the report on consistent sales records.


On current earnings

Backed by tennis champion Roger Federer, the Switzerland-based performance shoe maker is a rising star in the industry. Sales increased 55% to over $1 billion in 2022, powered by the reinvention of popular brands Cloudmonster, Cloudrunner and Cloudgo performance trainers.

Sequentially, adjusted earnings fell 66% to 5 cents per share, compared to 15 cents per share a year ago. Revenue rose 64.5% to $505 million, marking its eighth consecutive quarterly record.

Analysts had expected On Running to report adjusted earnings of 13 cents per share, increasing revenue by 55.7% to $477.5 million.

Over the year, On Run drove net sales growth of 44% to CHF 1.76 billion. This translates to an increase of about $2 billion, compared to $1.32 billion in 2022.

The company maintained its gross margin forecast at 58.5% and its adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) at 15%.

Sprint shoe stock

Shoe stock raced through early 2023, but then the group turned mixed. Crocs (CROXThe stock peaked in late April, then moved down and is now lower for the year. Skechers (SKXThe stock has stabilized and has made grudging gains since the beginning of May. It has an annual gain of 21%.

Disappointment maker outdoor deckers (deck) It was an impressive set, and it continued to climb to all-time highs after ratings were dumped. Deckers is up 40%.

But On Holdings is the clear leader of the group. UBS raised its price target for ONON stock to 46 from 42 last Tuesday and maintained the buy rating on the stock. That suggests the stock has another 32% room to go. UBS sees a good opportunity for On to raise its 2023 guidance, which should boost sell-side estimates and market sentiment.

KeyBanc commenced coverage of On Holding on July 25 with an overweight rating and a price target of 42 on the stock. Analyst Ashley Owens wrote in a research note: On Running is a premium sportswear brand made by runners and runners, and awareness of it continues to grow thanks to its grassroots marketing campaigns and unique product line. KeyBanc believes On guidance for 2023 is conservative and that there is upside potential as margins expand.

ONON share

ONON shares fell 6.3% to 32.45 before the market on Tuesday.

The running stock has doubled this year prior to the report, but is still recovering from a slide that began in early May. That slide — amid concerns about inventory build-up after On Running’s first-quarter earnings report — turned into a teacup rule with a handle.

ONON cleared that rule in July, but had trouble getting past the 5% buy zone.

On has been added to IBD Leaderboard Existing having crossed the trend line near 30 on June 9th. The RSI line is moving up, and the stock is still in the overbought area from the entry point 33.67. But he was demoted to half a spot on the Leaderboard.

In the running apparel, footwear and related manufacturing group leads in accordance with IBD stock check.

ONON shares have a composite rating of 99, which combines various technical indicators into one easy-to-read score. On the run he has a rating of 81 EPS. The stock’s line of relative strength is off the highs since mid-May and it currently holds a rating of 95 RS.

You can follow Harrison Miller for more stock news and updates on Twitter @employee

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