Why stock holdings rose 57% last year

stock of shoe company pending (Onon 1.31%) It will increase by 57.2% in 2023, according to data provided by S&P Global Market Intelligence. In fact, stock prices have already risen that much in the first three months of this year. And at one point it was up 113% year to date before falling in the second half of the year.

The company’s annual chart provides some clear indications of when the most important events have occurred for the On Holding stock, starting with the biggest jump of 2023, which occurred in March.

ONON data from YCharts.

On March 21, Onholding reported its full-year 2022 financial results. The running shoe company’s products are indeed gaining consumer attention, showing a stellar sales growth of 68.7%. The company remained profitable in 2022 with a net profit margin of 4.7%.

High sales growth and profitability have excited investors, sending the stock soaring in early 2023. Moreover, the guidance for 2023 presented by management at the time was also promising.

Onholding management said it expects net sales to increase by at least 39% in 2023. Additionally, with global supply chain issues easing, the company believed this would lower transportation costs and increase gross margins to 58.5%.

As of this writing, On Holding has reported financial results for the first three quarters of 2023. With each report, management raised its expectations for annual net sales. And when announcing third quarter results, we raised our gross profit expectations for this year to 59%. Simply put, the company has understated and overdelivered its 2023 results so far, and investors have responded by pushing the stock to market-beating performance.

So why did On Holding stock fall in the second half of the year?

I won’t bore you with the point, but I believe there are valid valuation concerns percolating into On Holding stock in 2023. At one point, the stock was trading at nearly 10 times trailing sales. And even after the decline, the product is trading at about six times trailing sales, which is higher than most footwear stocks.

ONON PS Ratio data from YCharts.

Of course, the counterargument is that On Holding ~ no Most shoe stocks. It’s growing faster than every other publicly traded shoe company. Gross profit margins are creeping toward 60%, which is just lagging. BirkenstockGross margin is 60.9%. And finally, it’s profitable. There is very little not to like here.

How high is the limit for onholding?

For stocks with high valuations, it’s important to consider the question of how big the business can grow.

With On Holding, there is a good chance it will be adopted by the jogging community. For example, the women’s winners of the 2023 Boston Marathon and New York City Marathon wore On Holding sneakers, which certainly helped increase brand awareness. There are even rumors that golf legend Tiger Woods could join On Hold’s team after ending his sponsorship deal. Nike.

When it comes to On Holding’s long-term potential, management is confident. At the company’s investor day presentation last October, management said it expects to double revenue and achieve gross margins of more than 60% by the end of 2026. Achieving these goals would certainly go a long way in supporting its lofty valuation, and this outlook is worth considering when investors think about this growth stock.