ONON Gains 11.2% in 3 Months: Can Growth Momentum Continue Longer Term

ONON Growth Drivers Support Momentum

On’s growth strategy rests on product innovation, direct-to-consumer expansion and deeper international penetration. First-quarter net sales rose 26.4% year over year at constant currency, while DTC sales increased 28.7%, outpacing wholesale growth of 25.1%.

Management expects at least 23% constant-currency net sales growth in 2026, with DTC, Asia-Pacific and apparel projected to outperform. A larger DTC mix should improve control over merchandising, consumer data and brand presentation, while selective store openings can extend the company’s premium retail network.

On Holding Expands Global Brand Reach

Geographic diversification is becoming a more meaningful growth engine. Asia-Pacific sales climbed 61.4% at constant currency in the first quarter and exceeded 20% of total sales for the first time. EMEA grew 25.6%, marking a sixth consecutive quarter of more than 25% constant-currency growth.

The Americas advanced 17.1% at constant currency and remained ONON’s largest region. Growth across established and emerging markets reduces dependence on one geography, while planned stores in cities such as Stockholm, São Paulo and Sydney provide additional avenues for market-share gains.

ONON Innovation Builds Future Demand

LightSpray is moving from athlete validation toward broader commercialization. On increased production capacity 30-fold with its Busan facility, while the LightSpray Cloudmonster Hyper sold out across several channels and generated several hundred daily DTC unit sales.

The next product cycle includes SURREAL Superfoam, scheduled to debut with the Cloudsurfer 3 in October 2026 before expanding across everyday-running franchises in 2027. These proprietary platforms can reinforce premium pricing, but sustained demand will depend on successful launches and repeat adoption beyond early enthusiasts.

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On Holding Faces Execution Risks

Tariffs remain the clearest margin risk because roughly 90% of footwear production was located in Vietnam in 2025. Full-year gross-margin guidance of at least 64.5% already includes an incremental tariff assumption, but further policy changes could add costs. SG&A also rose 16.4% in the first quarter, with marketing expenses up 35.1%.

Competition is intense. Nike, Inc. NKE combines global scale with broad running, lifestyle, wholesale and direct channels. Deckers Outdoor Corporation DECK, owner of HOKA, also competes directly in premium performance footwear. A more promotional market or weaker consumer spending could make On’s full-price strategy harder to sustain.

ONON Ranking Signals Growth Strength

On’s longer-term case remains supported by fast sales growth, expanding product platforms and wider geographic reach. However, the stock’s 21.4X forward earnings multiple and 6.2X trailing sales multiple suggest that investors are already assigning value to continued execution.

ONON currently carries a Zacks Rank #3 (Hold), which points to a neutral near-term earnings-estimate outlook. Its Growth Score of A reflects favorable growth characteristics, while the VGM Score of C signals a more mixed blend of value, growth and momentum. The combination supports patience rather than a conclusive call on further upside. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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