ONON

We rate On Holding AG (ONON) as a Hold with a composite score of 63.8/100 at a current price of $46.78. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (86th percentile) and value (75th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (33th percentile) and momentum (44th percentile) tempers our overall conviction. We assign a Wide Moat rating (74/100), High uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

On Holding AG holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 63.8/100 places it at rank #359 in our full 7,333-stock universe. With a $15.6B market capitalization, On Holding AG operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 20%, though momentum at the 44th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 61% (+18.1pp vs sector) narrow to operating margins of 8% (+6.8pp vs sector) and net margins of 10.4%, yielding a gross-to-net conversion rate of 17%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $46.78, On Holding AG appears undervalued relative to its fundamentals. Our value factor score of 75/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 9.3x (near the sector median), P/B of 79.6x, P/S of 1.6x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a High uncertainty rating to On Holding AG. Key risk factors include elevated market sensitivity (beta of 1.33), significant leverage (187% debt-to-equity). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.33); significant leverage (187% debt-to-equity). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 61th percentile and quality factor at the 86th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 61% provide a buffer against cost pressures; above-average stability (61th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate On Holding AG's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 521.4%, and the balance sheet is managed within acceptable parameters (D/E: 187%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; On Holding AG falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, On Holding AG receives a Hold rating with a composite score of 63.8/100 (rank #359 of 7,333). Our quantitative framework assigns a Wide Moat (74/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 60/100.

Our analysis supports a neutral stance on On Holding AG. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.