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adidas AG ADR ADDYY

Morningstar Rating
$112.08 +0.89 (0.80%)
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Company Report

Adidas’ Status as a Leading Global Sportswear Brand Holds Despite Multiple Setbacks

We think Adidas is a leader in athletic and “athleisure” apparel with a narrow moat rating based on an intangible brand asset. While it has been beset with problems over the past few years, we think it can still make progress under its five-year Own the Game plan (covers 2021-25). For example, its e-commerce, now available in about 67 countries, generated about EUR 4 billion in sales in 2023 (roughly 19% of its total), and we project it will exceed EUR 9 billion and 30% of its yearly sales by the end of this decade. Further, we think the firm’s new sportswear offerings and plans to improve its position in key categories like running and outdoor will be successful. However, because of heavy competition, the termination of the Yeezy partnership, and its slow recovery in China, our estimates are below the low end of Adidas’ Own the Game targets of compound average sales growth of 8%-10%, average net income growth of 16%-18%, and 2025 gross and operating margins of 53%-55% and 12%-14%, respectively.

Price vs Fair Value

ADDYY is trading at a 25% premium.
Price
$110.29
Fair Value
$56.00
Uncertainty
High
1-Star Price
$549.10
5-Star Price
$49.40
Economic Moat
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Capital Allocation
Yntkxtgt

Bulls Say, Bears Say

Bulls

Adidas’ e-commerce gives the company greater control over its brand and pricing. The firm has increased its digital capabilities and cut wholesale accounts. Adidas’ e-commerce sales were about EUR 4 billion in 2023, or 19% of total sales.

Bears

Adidas was affected by China’s restrictions in 2022, and the recovery has been slow. Other external threats include the war in Ukraine and inflation’s impact on consumer demand.

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Trading Information

Previous Close Price
$111.19
Day Range
$111.33112.22
52-Week Range
$78.33113.19
Bid/Ask
$109.81 / $113.65
Market Cap
$40.02 Bil
Volume/Avg
25,705 / 54,924

Key Statistics

Price/Earnings (Normalized)
38.60
Price/Sales
1.73
Dividend Yield (Trailing)
0.34%
Dividend Yield (Forward)
0.34%
Total Yield
0.35%

Company Profile

Adidas designs, develops, produces, and markets athletic and leisure apparel, footwear, accessories, and sports equipment. Under its eponymous brand, it produces apparel for competitive athletics, casual activewear, and casual fashion. Adidas sells its products in more than 160 countries through nearly 1,900 owned retail stores, 15,000 mono-branded franchise stores, 150,000 wholesale doors, and owned e-commerce that is available in 67 countries. The company was founded in 1949 in Germany.
Sector
Consumer Cyclical
Industry
Footwear & Accessories
Stock Style Box
Large Growth
Total Number of Employees
59,030

Competitors

Valuation

Metric
ADDYY
NKE
PUM
Price/Earnings (Normalized)
38.6027.4818.07
Price/Book Value
7.9110.012.47
Price/Sales
1.732.800.73
Price/Cash Flow
35.4622.069.15
Price/Earnings
ADDYY
NKE
PUM

Financial Strength

Metric
ADDYY
NKE
PUM
Quick Ratio
0.531.630.79
Current Ratio
1.222.741.55
Interest Coverage
1.163.31
Quick Ratio
ADDYY
NKE
PUM

Profitability

Metric
ADDYY
NKE
PUM
Return on Assets (Normalized)
0.75%15.46%6.07%
Return on Equity (Normalized)
2.96%40.71%16.16%
Return on Invested Capital (Normalized)
2.15%21.65%11.14%
Return on Assets
ADDYY
NKE
PUM
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Footwear & Accessories Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NKE
Nike Inc Class BLwtthkhhcVmns$142.4 Bil
ADDDF
adidas AGKXwybkg$40.0 Bil
DECK
Deckers Outdoor CorpPxj$24.2 Bil
ONON
On Holding AGCqfrv$11.3 Bil
SKX
Skechers USA Inc Class APfcvzgkdFgckkg$9.4 Bil
BIRK
Birkenstock Holding PLCWbcsrqm$8.9 Bil
CROX
Crocs IncGgsdj$8.7 Bil
ASCCF
ASICS CorpZccgvkf$8.6 Bil
ASCCY
ASICS Corp ADRXnvvgq$8.6 Bil

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