On Holding (ONON 2.28%) has been the envy of the athletic footwear world. The business has, at least. The stock has held a high valuation, though, and even strong financial results couldn't sustain that level today.
After reporting fourth-quarter and full-year results this morning, On shares slid as much as 14.3%. As of 2:08 p.m. ET, the stock remained lower by 6.95%.
Image source: Getty Images.
A new milestone
On reported sales increased 35.6% on a constant currency basis last year, exceeding 3 billion Swiss francs, or about $3.84 billion, for the first time. The company said revenue could reach almost 3.5 billion francs in 2026. But that was the problem for investors. Analysts expected about 3.7 billion francs.
The big news for investors, though, should have been that profitability has reached a new high. Gross profit margin increased to 62.8%, which should be the envy of the industry. On has a customer base willing to pay full price for its running shoes. That allowed the company to avoid the holiday-period discounts that competitors used to spur sales.
NYSE: ONON
Key Data Points
Owning a premium brand is always a plus for investors. With the stock now down about 10% over the last year, investors should consider buying shares on the dip. Similar to global luxury brands, On Holding has the consumer following and recognition to hold prices and raise margins. The stock may not have settled yet, but when it does, consider it a buying opportunity.
