• If you are wondering whether On Holding's current share price makes sense for the risk and growth on offer, the valuation story is where things get interesting.
• The stock last closed at US$33.03, with a 2.0% gain over 7 days, a 20.3% decline over 30 days, and returns of 29.6% decline year to date and 16.6% decline over 1 year, while the 3 year return stands at 12.4%.
• Recent market coverage has focused on how On Holding fits into the premium athletic and footwear space, with investors reacting to shifting expectations around consumer demand and brand strength. Commentary has also highlighted how sentiment around growth-focused consumer names in general has fed into the stock's swings.
• On Holding currently has a valuation score of 1 out of 6. The key question is what traditional valuation methods say about this score and how a more holistic framework later in the article can give you a clearer picture of value.

On Holding scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: On Holding Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting its future cash flows and discounting them back to today’s value.

For On Holding, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is CHF 278.8 million. Analyst inputs and extrapolated estimates suggest Free Cash Flow reaching CHF 780.1 million in 2035, with interim points such as CHF 419.9 million in 2026 and CHF 568.0 million in 2028. Simply Wall St uses analyst estimates where available, then extends the series using its own assumptions for later years.

After discounting these projected CHF cash flows back to today, the model produces an estimated intrinsic value of US$39.99 per share, compared with the recent share price of US$33.03. That implies the stock trades at a 17.4% discount to this DCF estimate, which in this model indicates the shares are undervalued on this measure.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests On Holding is undervalued by 17.4%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for On Holding.

Approach 2: On Holding Price vs Earnings

For profitable companies, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. This is often how the market frames valuation for established, earnings-generating businesses.

A higher or lower P/E is often tied to what investors expect for future growth and how much risk they see in those earnings. Stronger growth and lower perceived risk can justify a higher "normal" or "fair" P/E, while slower growth or higher uncertainty can point to a lower one.

On Holding trades on a P/E of 42.99x. That sits above the Luxury industry average of 18.65x and also above a peer group average of 28.15x. Simply Wall St introduces a “Fair Ratio” to refine this picture. For On Holding, the Fair Ratio is 27.80x.

The Fair Ratio is designed to be more tailored than simple peer or industry comparisons, because it blends factors such as earnings growth, profit margins, risk profile, market cap and industry context into a single reference multiple. This gives you a benchmark that is specific to the company rather than relying only on broad group averages.

Comparing the current P/E of 42.99x with the Fair Ratio of 27.80x suggests the shares are trading above the level implied by these fundamentals.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your On Holding Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about On Holding to the numbers by linking your view of its brand strength, international growth and margins to a specific revenue and earnings forecast. This then produces a Fair Value you can compare with the current price. It is kept up to date as fresh news or earnings arrive, and can differ widely across the Community. For example, some investors may align closer to the more cautious Fair Value near US$42.09, while others may lean toward the optimistic end around US$81.43. This gives you an accessible tool to see where your own view sits on that spectrum.

Do you think there's more to the story for On Holding? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.