Does On Holding AG (ONON) have an economic moat?

MoatScan AI rates On Holding AG (ONON) 46/100 for moat strength, assessed across five sources of competitive advantage: network effects, switching costs, intangible assets, cost advantages and efficient scale. On has built a credible premium athletic brand centered on CloudTec innovation, elite athlete validation, and a sharp performance-running identity.

What is On Holding AG's moat score?

On Holding AG (ONON) has a moat score of 46/100. The score is a weighted average of five pillar ratings: network effects, switching costs, intangible assets, cost advantages, and efficient scale. A higher score means the competitive advantages MoatScan AI identifies are wider and more durable.

How does ONON's share price compare with its estimated fair value?

MoatScan AI estimates ONON's intrinsic value with a discounted cash flow (DCF) model and shows how that estimate compares with the market price at the time of analysis. The estimate updates with each new financial analysis and is a research estimate, not a recommendation.

What is On Holding AG's fair value estimate?

MoatScan AI derives On Holding AG's (ONON) fair value per share from a discounted cash flow (DCF) model built on the company's reported financials, analyst growth forecasts, and a discount rate reflecting its cost of capital. The Financial Analysis tab shows the estimate alongside every assumption behind it.

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ONON$30.00

On Holding AG

Last Updated

Sep 29, 202613 days ago

Moat & Trend

Management

AI Impact

Competitive Radar

Moat Score

46/100

Executive Summary

On has built a credible premium athletic brand centered on CloudTec innovation, elite athlete validation, and a sharp performance-running identity. That gives it real pricing power in select niches, especially among serious runners and consumers who value design and technical differentiation. However, the company still operates in a highly competitive global footwear market dominated by much larger incumbents, and customers can readily multi-home across brands. Its advantages are therefore stronger in brand and product perception than in hard structural barriers. On’s scale remains too small for a true cost advantage, and the market remains far from oligopolistic. The moat is best described as narrow, but it is trending positively as awareness expands beyond Switzerland and into broader sports and lifestyle categories.

Network Effects

Brand Buzz, Not True Network

Pillar Strength

3/10

On benefits from community visibility, elite athlete endorsement, and social proof, but these are not classic network effects. A runner buying On shoes does not materially increase the utility of the shoes for other runners, and the product becomes no better as more people use it. The company’s sponsored groups and ambassadors can create momentum, but consumers still compare products on fit, comfort, style, and performance rather than on user density. Retailers also do not become harder to displace because On is popular. That makes the reinforcement loop mostly marketing-driven, not a structural network that compounds value with each new participant.

Switching Costs

Habitual, Not Locked-In

Pillar Strength

5.5/10

Switching costs are real but modest. Serious runners often develop preferences for a brand's ride, stack height, and fit, and once they have trained in a model that works, there is some behavioral inertia. On also benefits from repeat purchases among customers who like its cushioning and aesthetic, which can make the next sale easier than a first sale. But footwear is still a low-friction category: consumers can test alternatives season by season, and retailers can shift shelf space without major penalty. The company has loyalty from enthusiasts, yet that loyalty is better described as preference than lock-in.

Intangible Assets

Premium Brand, Proprietary Tech

Pillar Strength

7/10

On’s strongest pillar is its intangible asset base. CloudTec gives the brand a distinctive product story, and the company has built a premium identity through athlete validation, founder credibility, and high-visibility partnerships such as Roger Federer, Iga Świątek, and Ben Shelton. That combination creates an image of technical innovation and aspirational design that rivals cannot quickly copy. While the underlying mechanics are not as legally impenetrable as a drug patent, the brand equity is harder to replicate than a generic running shoe design. If On keeps converting innovation into recognizable product franchises, these intangibles can sustain premium pricing and repeat demand for a long time.

Cost Advantages

Premium, Not Low-Cost

Pillar Strength

3.5/10

On does not have a meaningful cost advantage versus the category leaders. Its products are premium priced, which helps margins, but that is not the same as a lower structural cost base. The company still relies on outsourced manufacturing, and moving production to Indonesia and Vietnam may improve flexibility, not create a durable cost gap. Larger competitors such as Nike and adidas enjoy far greater scale in sourcing, logistics, and overhead absorption. On can improve efficiency as it grows, yet it is starting from a much smaller base. The business competes on perceived performance and brand rather than on the ability to undercut rivals on cost.

Efficient Scale

Crowded Specialty Market

Pillar Strength

4/10

The running-shoe market does not look like a natural monopoly or a tightly protected oligopoly. On has carved out a high-growth niche, but it faces strong rivals in Hoka, Nike, ASICS, adidas, and New Balance, all of which can fund product development and marketing at scale. Specialty running retail can create some shelf-space discipline, yet that does not prevent new models from gaining traction if they resonate with consumers. On’s share is still relatively small globally, so its presence has not yet made the category uneconomical for entrants. There is some scale benefit in brand visibility, but not enough to qualify as a strong efficient-scale moat.

Moat Type & Trend

Why this company earns its moat rating, and where the moat is heading

Moat Type

Narrow Moat

Trend

Positive

Why This Rating

This is Narrow rather than Wide because On’s advantages are concentrated in premium running and athletic lifestyle niches, not across the full footwear market. Twenty years from now, CloudTec, design-led innovation, and the Swiss performance image may still support premium pricing, but consumers will likely remain able to move among On, Hoka, Nike, ASICS, and adidas with limited pain. The company has not yet built the scale, exclusive distribution control, or legally locked-in ecosystem that would make its edge broadly self-reinforcing and difficult for major rivals to challenge.

Why This Trend

The moat is improving because On continues to turn specialist running credibility into broader brand awareness, especially in the U.S., tennis, and now football, while product launches like Cloudmonster and Cloudboom reinforce performance credentials. Athlete endorsements and Olympic-level visibility have widened its relevance beyond Switzerland, and that can strengthen pricing power if sell-through stays strong. The trend would turn negative if growth slows, premium positioning loses resonance, or rivals such as Hoka and Nike regain share in the segments On is actually trying to protect.

Management Quality Assessment

Evaluating leadership track record, capital allocation, and governance

Verdict

Strong

On Holding’s management has delivered strong operating results, but the public track record is still relatively short. Martin Hoffmann led the company through its IPO and five years as CEO; founder co-CEOs David Allemann and Caspar Coppetti now run the business, which should reinforce long-term orientation. Capital allocation looks disciplined: ROIC of 32.3% comfortably exceeds WACC of 14.95%, and the company has favored reinvestment over dividends or aggressive buybacks. Insider alignment appears favorable at the founder level, though the directional trend is not fully clear. Executive compensation was sizable at CHF 19.3 million in 2025, but it came alongside record sales, margins, and operating profit, with no obvious governance red flags.

Key Highlights

ROIC of 32.3% versus WACC of 14.95% suggests management is creating economic value and reinvesting at attractive returns.
The company has no dividend and only negative buyback yield, indicating a preference to fund growth rather than return capital prematurely.
Founder co-CEOs David Allemann and Caspar Coppetti now lead the company, which generally improves strategic continuity and owner orientation.
Caspar Coppetti holds a very large equity stake and made an open-market purchase in 2026, supporting insider alignment; overall insider-trend direction is not fully clear.
2025 executive compensation totaled CHF 19.3 million, but performance was strong in the same period, with revenue, gross margin, and operating profit all rising sharply.

AI Impact Assessment

Evaluating how AI strengthens or disrupts existing moat pillars

Net verdict: Net Neutral. On’s moat is built mainly on CloudTec cushioning, premium brand equity, and a growing direct-to-consumer channel, so AI does not currently change the core value proposition. The main opportunity is operational: richer demand forecasting, personalization, and inventory optimization can improve full-price sell-through, but those gains are replicable by peers and therefore defensive rather than moat-expanding. The bigger AI effect is on the brand and marketing layer, where generative tools lower content and campaign costs across the premium athleticwear market. That can raise competitive intensity, yet it does not directly erase On’s product differentiation near term. Key uncertainty: whether On can turn its customer and product-performance data into a harder-to-copy design and engagement engine.

AI Opportunity Highlights

3 / 10

On’s direct-to-consumer business generates first-party purchase and fit data that can improve personalization and retention.
CloudTec product testing and athlete feedback can be analyzed with AI to shorten design iteration cycles.
AI-driven demand forecasting can improve inventory allocation and reduce markdowns in a high-gross-margin model.
Localized content generation can support faster premium marketing in new geographies without proportional headcount growth.

AI Threat Highlights

4 / 10

Generative creative tools make it cheaper for smaller athleticwear brands to produce premium-looking campaigns and product imagery.
AI-assisted design and rapid prototyping lower barriers for challengers to imitate silhouettes, colorways, and launch cycles.
Search and social ad optimization are becoming standardized, reducing the advantage of scale in customer acquisition.
Retailers and marketplaces can use AI-driven recommendations and private-label development to pressure brand differentiation.

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Last Updated

Sep 29, 202613 days ago

Target Price

Analyst Consensus

FAIR VALUE

Financial Strength

Financial Score

78/100

Executive Summary

On Holding AG’s standout strength is its combination of rapid scale-up and improving profitability, with revenue rising from CHF 724.6M in FY2021 to CHF 3.01B in FY2025 and CHF 3.22B TTM, while gross margin expanded to 64.8% TTM and operating margin to 13.8% TTM. Cash generation has also turned materially positive, with operating cash flow reaching CHF 525.4M TTM and free cash flow strengthening despite higher capex. The balance sheet is solid, supported by CHF 1.24B of cash and short-term investments against CHF 562.5M of debt, leaving a net cash position of CHF 676.9M. Tensions remain in FX volatility, rising SG&A, and working-capital intensity, which have made earnings and liquidity less smooth than the growth story suggests. Overall, the profile is strong and balanced, consistent with its 7.5/10 to 8/10 ratings across the core areas.

Income Statement

Revenue · Margins · Profitability

Section Score

7.5/10

On Holding delivered strong multi-year growth, with revenue rising from CHF 724.6M in FY2021 to CHF 3.01B in FY2025 and CHF 3.22B TTM, though top-line momentum has slowed from 30.0% in FY2025 to 18.5% TTM. Profitability has improved meaningfully: gross margin expanded from 59.4% to 62.8% in FY2025 and 64.8% TTM, while operating margin improved to 13.8% TTM from 12.5%. The main distortion is currency volatility, including a CHF 173.2M FX loss in FY2025 versus a CHF 67.7M gain in FY2024, which makes pretax and net income choppy. Overall, earnings power looks durable and above typical consumer apparel norms, but rising SG&A and FX swings remain key risks.

Financials are in millions CHF unless otherwise specified

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	TTM
Period Ending	Dec 31, 2021	Dec 31, 2022	Dec 31, 2023	Dec 31, 2024	Dec 31, 2025	Jun 30, 2026
Revenue	724.6	1,222	1,792	2,318	3,014	3,220
Revenue Growth	70.37%	68.66%	46.64%	29.36%	30.01%	18.48%
Net Income	-170.2	57.7	79.6	242.3	203.7	396.2
Net Income Growth	—	—	37.95%	204.40%	-15.93%	191.54%
Profit Margin	-23.49%	4.72%	4.44%	10.45%	6.76%	12.30%

Data as of Jun 30, 2026

Balance Sheet

Assets · Liabilities · Equity

Section Score

8/10

On Holding’s balance sheet remains solid and steadily expanding. Total current assets rose to CHF 2.29B from CHF 1.96B, while total current liabilities increased to CHF 810M, leaving working capital robust at CHF 1.48B. Cash and short-term investments of CHF 1.24B comfortably exceed total debt of CHF 562.5M, supporting a net cash position of CHF 676.9M. Total assets climbed to CHF 3.24B, and shareholders’ equity increased to CHF 1.91B from CHF 1.63B, indicating a healthy capital base. Liabilities have grown, especially lease obligations and accrued expenses, but they remain manageable relative to assets and equity. Inventory and receivables have also risen, so discipline in working capital will matter.

Financials are in millions CHF unless otherwise specified

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	Current
Period Ending	Dec 31, 2021	Dec 31, 2022	Dec 31, 2023	Dec 31, 2024	Dec 31, 2025	Jun 30, 2026
Total Current Assets	964.6	1,052	1,151	1,760	1,962	2,293
Total Assets	1,237	1,382	1,593	2,377	2,835	3,243
Total Current Liabilities	205	242.7	305.6	660.4	724.4	810
Total Liabilities	388.1	412.9	518.5	984.9	1,203	1,332

Data as of Jun 30, 2026

Cash Flow Statement

Operations · Investing · Financing

Section Score

8/10

Cash generation improved sharply after FY2022, with operating cash flow rising from CHF -227M to CHF 510.6M in FY2024 and CHF 359.5M in FY2025; TTM CFO is CHF 525.4M, ahead of the latest full year. Free cash flow also strengthened from CHF -287.3M in FY2022 to CHF 450.1M in FY2024, though FY2025 eased to CHF 286.6M as capital expenditures increased to CHF 72.9M. Working capital remains a major swing factor, especially inventory and receivables. Capital allocation looks disciplined overall, with debt reduced each year and no dividend burden, but share issuance and stock compensation are still meaningful. Overall, cash quality is solid, with some volatility but clear positive generation.

Financials are in millions CHF unless otherwise specified

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	TTM
Period Ending	Dec 31, 2021	Dec 31, 2022	Dec 31, 2023	Dec 31, 2024	Dec 31, 2025	Jun 30, 2026
Operating Cash Flow	16.9	-227	232.1	510.6	359.5	525.4
Operating Cash Flow Growth	—	—	—	119.99%	-29.59%	26.24%
Free Cash Flow	-7.7	-287.3	189.3	450.1	286.6	437.9
Free Cash Flow Growth	—	—	—	137.77%	-36.33%	24.37%
Free Cash Flow Margin	-1.06%	-23.51%	10.56%	19.41%	9.51%	13.60%
Free Cash Flow After Leases	-21	-302.7	163.8	398.8	216.7	366.9

Data as of Jun 30, 2026

Key Ratios

Liquidity · Leverage · Efficiency · Returns

Section Score

7.5/10

On Holding shows a generally solid operating profile with a few areas to watch. Liquidity remains comfortable, with the current ratio at 2.83 and the quick ratio at 2.12, though both have drifted down from much higher levels in FY2021-2022, indicating less excess cushion than before. Leverage is manageable: debt-to-equity has risen from 0.17-0.25 to 0.29, but debt remains moderate relative to EBITDA and cash generation. Efficiency is improving, as asset turnover and inventory turnover have strengthened over time. Profitability and returns are a clear strength, with ROIC, ROCE, ROA, and ROE all well above earlier-period levels and still healthy in the latest reading.

Ratios are dimensionless unless otherwise noted

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025	Current
Period Ending	Dec 31, 2021	Dec 31, 2022	Dec 31, 2023	Dec 31, 2024	Dec 31, 2025	Sep 28, 2026
Debt / Equity Ratio	0.21	0.17	0.21	0.25	0.32	0.29
Quick Ratio	3.92	2.56	2.43	1.92	1.98	2.12
Current Ratio	4.71	4.33	3.77	2.67	2.71	2.83
ROEReturn on Equity (ROE)	-31.13%	6.35%	7.79%	19.65%	13.47%	23.95%
ROAReturn on Assets (ROA)	-10.89%	4.06%	7.55%	6.64%	9.03%	9.58%
ROICReturn on Invested Capital (ROIC)	-54.20%	11.61%	23.60%	23.40%	39.99%	32.30%
ROCEReturn on Capital Employed (ROCE)	-13.70%	7.50%	14.00%	12.30%	17.80%	18.20%

Data as of Sep 28, 2026

Growth

Revenue · EPS · Valuation · Estimates

Section Score

8/10

On Holding shows a strong multi-year growth profile, moving from CNY? No, CHF. Revenue expanded from CHF 0.72B to CHF 2.32B across the historical period, while analyst estimates point to continued compounding to CHF 3.51B and CHF 4.17B. The pattern is one of rapid early growth easing into a steadier, more mature expansion rate, with no sign of a sharp slowdown. EPS has been more volatile, swinging from a loss to positive earnings and then re-accelerating in the forecast period, with projected EPS growth outpacing revenue growth in FY 2026, suggesting margin improvement. Sentiment is constructive: a Buy consensus from 31 analysts, a wide but positive target range, and recommendation trends that remain heavily tilted toward Strong Buy/Buy with limited bearish views.

Third-party Analyst Price Targets

Low$19.93-33.57%

Median$41.08+36.93%

Average$43.24+44.13%

High$71.37+137.90%

BuyConsensus rating and price targets published by third-party analysts. Not a MoatScan AI view.

31 analysts

Third-party Analyst Recommendation Trends

Rating	Apr '26	May '26	Jun '26	Jul '26	Aug '26	Sep '26
Strong Buy	18	18	18	18	16	17
Buy	4	4	5	6	7	8
Hold	4	4	3	3	4	5
Sell	0	0	0	0	0	0
Strong Sell	1	1	1	1	1	1
Total	27	27	27	28	28	31

Forecast · Analyst Estimates

Revenue This Year3.51B

+16.54%from 3.01B

FY 2026

Revenue Next Year4.17B

+18.80%from 3.51B

FY 2027

EPS This Year· non-GAAP adj.1.42

+77.73%from 0.80

FY 2026

EPS Next Year· non-GAAP adj.1.70

+19.72%from 1.42

FY 2027

Historical · Reported Actuals

Metric	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025
Revenue	0.72B	1.22B	1.79B	2.32B	3.01B
Revenue Growth	+70.37%	+68.64%	+46.64%	+29.35%	+30.03%
EPS (GAAP diluted)	-0.59	0.18	0.25	0.74	0.61
EPS Growth	—	+130.51%	+38.89%	+196.00%	-17.57%

Revenue in CHF · EPS per share · Price targets in USD

Data as of Dec 31, 2025 · Forecast EPS is analyst non-GAAP adjusted; historical EPS is GAAP diluted — not directly comparable.

Fair Value Estimation

DCF · Model estimate vs. price -11.3% · Price near model estimate

AI Fair Value Estimate (DCF)

$26.6vs$30

Model estimate vs. price-11.3%

Price near model estimate

A discounted cash flow framework fits best because the business is already cash generative, shows strong profitability, and is not in a cyclical distress or pre-revenue phase. I modeled a 7-year runway because Year 1 and Year 2 revenue growth are both in the 10% to 25% range, then faded growth toward terminal conditions while allowing modest operating leverage in EBITDA margin. Converted from CHF to USD at 1 CHF = 1.1983 USD.

AI Valuation Commentary

The DCF points to value below the current share price because even with healthy revenue growth, modest margin expansion, and a strong cash position, the model is constrained by a 13.39% discount rate and only a 3.5% terminal growth rate. The 7-year horizon is appropriate given mid-teens forecast growth, but the valuation is still sensitive to EBITDA margin expansion and terminal assumptions. A bull case would require sustained growth above the current forecast or materially better operating leverage; a bear case would be slower growth or margin compression, which would push fair value lower.

DCF Assumptions

WACC

13.4%

Weighted avg cost of capital

Revenue Growth (7Y)

12.0%

CAGR assumption

EBITDA Margin

17.0%

Steady-state projection

CapEx / Revenue

2.7%

Capital investment

Terminal Growth

3.5%

Long-run growth rate

Projection Period

7 yrs

Explicit forecast horizon

Projected Cash Flows

Values in millions CHF

Year	Revenue	EBITDA	FCF	Discounted FCF
Yr 1	3,751	571	424	374
Yr 2	4,457	693	516	402
Yr 3	5,156	816	611	419
Yr 4	5,800	935	704	426
Yr 5	6,358	1,044	788	421
Yr 6	6,775	1,132	858	404
Yr 7	7,012	1,192	907	376
Terminal Value (PV)				3,938

Key Valuation Ratios

Current vs 5-year average

PE Ratio

20.48x

4Y avg 75.99x

-73.0% vs avg

Forward PE

16.37x

5Y avg 62.54x

-73.8% vs avg

P/FCF Ratio

19.05x

3Y avg 38.78x

-50.9% vs avg

PS Ratio

2.52x

5Y avg 7.00x

-64.0% vs avg

A multiple below its own multi-year average can indicate the stock is cheaper than its recent history — context, not a standalone signal.

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Frequently asked questions about On Holding AG

Does On Holding AG (ONON) have an economic moat?: MoatScan AI rates On Holding AG (ONON) 46/100 for moat strength, assessed across five sources of competitive advantage: network effects, switching costs, intangible assets, cost advantages and efficient scale. On has built a credible premium athletic brand centered on CloudTec innovation, elite athlete validation, and a sharp performance-running identity.Sign in free to see the Moat Type verdict and the pillar-by-pillar reasoning.
What is On Holding AG's moat score?: On Holding AG (ONON) has a moat score of 46/100. The score is a weighted average of five pillar ratings: network effects, switching costs, intangible assets, cost advantages, and efficient scale. A higher score means the competitive advantages MoatScan AI identifies are wider and more durable.Sign in free to see each pillar rating, the Moat Type verdict and the moat trend.
How does ONON's share price compare with its estimated fair value?: MoatScan AI estimates ONON's intrinsic value with a discounted cash flow (DCF) model and shows how that estimate compares with the market price at the time of analysis. The estimate updates with each new financial analysis and is a research estimate, not a recommendation.Sign in free to see the fair value estimate and how it compares with the price.
What is On Holding AG's fair value estimate?: MoatScan AI derives On Holding AG's (ONON) fair value per share from a discounted cash flow (DCF) model built on the company's reported financials, analyst growth forecasts, and a discount rate reflecting its cost of capital. The Financial Analysis tab shows the estimate alongside every assumption behind it.Sign in free to see the estimate and the full assumptions behind it.

Disclaimer: The analysis on this page is generated by AI and is provided for informational purposes only. It does not constitute financial advice, investment recommendations, or an offer to buy or sell any security. Always conduct your own due diligence and consult a qualified financial adviser before making any investment decisions. MoatScan AI is an educational research tool. It is not licensed or registered with the Securities Commission Malaysia or any other financial regulator, and it holds no positions in, and receives no compensation from, any company analysed.

ONON$30.00

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