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

ON (NYSE:ONON) announced its quarterly earnings results on Tuesday, August 11th. The company reported $0.35 earnings per share (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 22.92%. The firm had revenue of $1.05 billion during the quarter, compared to analysts’ expectations of $1.09 billion. During the same quarter in the previous year, the firm posted ($0.09) EPS. The firm’s revenue for the quarter was up 13.5% on a year-over-year basis.

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 Stock Down 1.8%

NYSE ONON traded down $0.53 during midday trading on Monday, hitting $29.49. 7,210,535 shares of the company traded hands, compared to its average volume of 6,223,578. The company has a debt-to-equity ratio of 0.25, a current ratio of 2.83 and a quick ratio of 2.25. The company has a market cap of $18.82 billion, a PE ratio of 20.06, a price-to-earnings-growth ratio of 0.61 and a beta of 2.12. The company’s 50-day simple moving average is $36.07 and its 200-day simple moving average is $37.98. ON has a 52 week low of $29.26 and a 52 week high of $51.08.

Insiders Place Their Bets

In related news, CEO Caspar Felix Coppetti purchased 65,000 shares of ON stock in a transaction dated Friday, August 14th. The stock was purchased at an average cost of $30.67 per share, with a total value of $1,993,550.00. Following the transaction, the chief executive officer owned 2,440,855 shares in the company, valued at approximately $74,861,022.85. The trade was a 2.74% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, insider Olivier Bernhard acquired 65,000 shares of the firm’s stock in a transaction that occurred on Friday, August 14th. The shares were bought at an average price of $30.67 per share, with a total value of $1,993,550.00. Following the completion of the purchase, the insider directly owned 5,228,184 shares in the company, valued at $160,348,403.28. The trade was a 1.26% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. Company insiders own 68.57% of the company’s stock.

Institutional Trading of ON

A number of institutional investors have recently modified their holdings of ONON. Invesco Ltd. boosted its stake in ON by 25.0% in the fourth quarter. Invesco Ltd. now owns 196,385 shares of the company’s stock valued at $9,128,000 after acquiring an additional 39,295 shares in the last quarter. Corient Private Wealth LLC grew its holdings in ON by 35.7% in the fourth quarter. Corient Private Wealth LLC now owns 29,310 shares of the company’s stock worth $1,338,000 after purchasing an additional 7,713 shares during the last quarter. Alberta Investment Management Corp acquired a new position in shares of ON during the fourth quarter worth $1,683,000. Mercer Global Advisors Inc. ADV increased its position in shares of ON by 59.9% during the fourth quarter. Mercer Global Advisors Inc. ADV now owns 14,413 shares of the company’s stock worth $663,000 after purchasing an additional 5,399 shares in the last quarter. Finally, Caitlin John LLC purchased a new stake in shares of ON during the 4th quarter valued at $25,000. 36.39% of the stock is currently owned by institutional investors.

Analyst Ratings Changes

A number of equities research analysts have weighed in on the company. KeyCorp reaffirmed an “overweight” rating on shares of ON in a research report on Monday, August 10th. Truist Financial dropped their price target on ON from $48.00 to $40.00 and set a “buy” rating on the stock in a research report on Tuesday, August 11th. Zacks Research lowered ON from a “strong-buy” rating to a “hold” rating in a research note on Wednesday, August 5th. JPMorgan Chase & Co. began coverage on ON in a report on Thursday, July 2nd. They issued an “overweight” rating and a $51.00 price objective for the company. Finally, Bank of America reaffirmed a “buy” rating on shares of ON in a research note on Wednesday, August 12th. One equities research analyst has rated the stock with a Strong Buy rating, eighteen have given a Buy rating, five have assigned a Hold rating and one has given a Sell rating to the company’s stock. According to data from MarketBeat, the company has a consensus rating of “Moderate Buy” and a consensus target price of $48.57.

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.