ON (NYSE:ONON) Posts Quarterly Earnings Results, Misses Expectations By $0.07 EPS

ON (NYSE:ONON) posted its earnings results on Tuesday. The company reported $0.35 EPS for the quarter, missing analysts’ consensus estimates of $0.42 by ($0.07), Briefing.com reports. ON had a net margin of 12.09% and a return on equity of 23.94%. The business had revenue of $1.05 billion during the quarter, compared to analysts’ expectations of $1.09 billion. During the same quarter in the prior year, the firm earned ($0.09) EPS. ON’s revenue for the quarter was up 13.5% compared to the same quarter last year.

Here are the key takeaways from ON’s conference call:

• Q2 net sales rose 21.6% at constant currency to CHF 850 million, led by direct-to-consumer sales, which grew 34.3% and reached 45.7% of total revenue. Growth was broad-based, with particularly strong results in APAC and EMEA.
• Gross margin expanded to 65.4% and adjusted EBITDA margin reached 19.8%, supported by stronger DTC mix, full-price selling, and operating efficiencies. The company raised its full-year gross margin outlook to at least 65% while maintaining its 19.5%-20% adjusted EBITDA margin target.
• Wholesale growth moderated to 12.7% at constant currency, as softer sell-through for everyday running franchises in the promotional Americas market prompted On to reduce sell-in and avoid excess channel inventory. These actions are expected to weigh on Q3 growth, although management characterized the weakness as temporary.
• Management highlighted strong momentum in newer growth engines, including apparel, which grew 56.2% at constant currency, training at 40%, and rapidly expanding tennis and lifestyle franchises. The upcoming product pipeline, including Cloudsurfer 3, new foam technologies, and LightSpray products, is expected to support future full-price demand.
• Full-year constant-currency sales growth guidance was reset to the low 20s, reflecting deliberate wholesale restraint, while management expects continued strong DTC momentum and significant DTC mix expansion in the second half. Inventory rose 31% year over year, primarily due to higher product volumes and foreign-exchange effects.

ON Trading Down 1.2%

Shares of NYSE ONON traded down $0.38 during midday trading on Thursday, reaching $30.63. 4,999,853 shares of the stock were exchanged, compared to its average volume of 6,069,616. The company has a market capitalization of $19.55 billion, a P/E ratio of 20.83, a P/E/G ratio of 0.57 and a beta of 2.12. ON has a 52-week low of $30.11 and a 52-week high of $51.08. The company has a current ratio of 2.98, a quick ratio of 2.39 and a debt-to-equity ratio of 0.26. The stock has a 50 day moving average price of $37.04 and a 200-day moving average price of $38.70.

Wall Street Analyst Weigh In

A number of research firms recently issued reports on ONON. Zacks Research lowered ON from a “strong-buy” rating to a “hold” rating in a report on Wednesday, August 5th. Bank of America reaffirmed a “buy” rating on shares of ON in a research report on Wednesday. Robert W. Baird cut their price target on ON from $70.00 to $55.00 and set an “outperform” rating on the stock in a research report on Wednesday. The Goldman Sachs Group set a $42.00 price objective on shares of ON in a research note on Wednesday. Finally, Barclays cut their price target on ON from $46.00 to $42.00 and set an “overweight” rating for the company in a research note on Wednesday. One investment analyst has rated the stock with a Strong Buy rating, eighteen have given a Buy rating, five have given a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat, ON presently has a consensus rating of “Moderate Buy” and a consensus price target of $48.57.

More ON News

Here are the key news stories impacting ON this week:

• Positive Sentiment: On Holding reported 13.5% year-over-year second-quarter revenue growth to CHF 850.3 million, or 21.6% in constant currency. Direct-to-consumer sales increased 26%, while Asia-Pacific growth and the company’s premium positioning supported profitability. On Holding Q2 Earnings Miss Estimates, FY’26 Margin Outlook Raised
• Positive Sentiment: Gross margin improved to 65.4%, adjusted EBITDA margin reached 19.8%, and management raised its full-year gross-margin outlook to at least 65%. Several analysts—including BTIG, Stifel, UBS, Telsey and Robert W. Baird—still maintain positive ratings despite lowering their targets. On Holding Analysts Slash Their Forecasts After Q2 Results
• Neutral Sentiment: Analysts’ revised targets remain materially above the current share price: BTIG cut its target to $60, UBS to $73, Stifel to $41, Telsey to $43 and Baird to $55. Needham reduced its target to $37 and retained a Buy rating, while William Blair downgraded the stock to Market Perform. BTIG Research Issues Pessimistic Forecast for ON Stock Price
• Negative Sentiment: Revenue and earnings missed Wall Street expectations, with quarterly EPS of $0.35 versus the $0.42 consensus and revenue of approximately $1.05 billion versus $1.09 billion. Investors were especially disappointed by slower wholesale growth as management deliberately moderated sell-in to protect pricing and brand equity. On Holding Just Had Its Worst Trading Day Ever
• Negative Sentiment: Higher U.S. tariffs, foreign-exchange pressure and cautious consumer spending contributed to the weaker near-term outlook. The combination of a revenue miss and concerns that sales momentum is slowing prompted the stock’s record one-day decline and pushed it near its 12-month low. On Holding Slumps on Concerns of Slowing Sales Growth

Institutional Trading of ON

Hedge funds have recently bought and sold shares of the company. Caitlin John LLC acquired a new stake in shares of ON during the fourth quarter worth $25,000. Caitong International Asset Management Co. Ltd lifted its position in ON by 555.1% during the fourth quarter. Caitong International Asset Management Co. Ltd now owns 701 shares of the company’s stock worth $33,000 after buying an additional 594 shares during the period. Horizon Investments LLC purchased a new position in ON during the third quarter worth about $44,000. Jessup Wealth Management Inc acquired a new stake in ON in the 4th quarter worth about $46,000. Finally, Triumph Capital Management boosted its stake in ON by 927.7% in the 4th quarter. Triumph Capital Management now owns 1,593 shares of the company’s stock worth $74,000 after buying an additional 1,438 shares during the last quarter. Institutional investors and hedge funds own 36.39% of the company’s stock.

ON Company Profile

On Holding AG, commonly known as On, is a Swiss performance footwear and apparel company headquartered in Zurich. Founded in 2010, the company designs, develops and sells running shoes, performance apparel and accessories for road, trail and everyday use. On’s product philosophy centers on engineered cushioning and responsiveness intended to serve both serious athletes and lifestyle consumers.

On is best known for its proprietary midsole technology and distinctive sole architecture, marketed under names such as the Cloud family of shoes and related performance lines.