On Holding Stock Soars After Exceptional Q2 Results, But Is It a Buy Right Now?
On Holding (NYSE:) witnessed an impressive 8% surge in its stock price following the release of its Q2 2024 results, with revenue and net income experiencing significant growth of 27.8% and 834.3%, respectively. The Swiss footwear retailer’s co-founder and executive co-chairman expressed confidence in the company’s trajectory moving forward.
Key highlights from On Holding’s Q2 results include a 27.8% increase in total net sales to 567.7 million Swiss francs, surpassing Wall Street’s expectations. Particularly noteworthy was the 66.6% rise in apparel sales during the quarter. Additionally, the company’s net income saw a staggering 834.3% year-over-year increase to 30.8 million Swiss francs.
Furthermore, On Holding demonstrated improved profitability, with its net income margin more than doubling to 11.4% in Q2 2024 from 5.5% in the previous year. The company also experienced significant growth in online sales, with a 33.1% increase compared to the first half of 2023.
Analysis: Evaluating On Holdings’ Results, Guidance, and Valuation
While On Holding has delivered strong performance in H1 2024, investors should exercise caution when considering the stock. The company has reiterated its full-year 2024 guidance, projecting at least 30% net sales growth and total sales of 2.26 billion Swiss francs. However, with a high GAAP trailing P/E ratio and P/S ratio, some investors may find the stock to be richly valued compared to industry peers.
For investors looking to enter a position in On Holding, a prudent approach would be to cautiously purchase a small number of shares to maintain exposure to the company while managing risk. This strategy allows investors to benefit from the company’s strong performance while mitigating potential downside.
In conclusion, while On Holding has shown impressive growth and profitability, investors should carefully consider the stock’s valuation and market expectations before making investment decisions.