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adidas AG ADR ADDYY

Morningstar Rating
$101.42 +0.09 (0.09%)
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Company Report

Adidas: Disappointing Guidance Demonstrates Depth of Problems; Shares Fully Valued

Ahead of its full report on March 13, narrow-moat Adidas revealed preliminary 2023 results and initial 2024 guidance below our estimates. While disappointing, the outlook was not surprising given similarly dim reports from peers wide-moat Nike and no-moat Puma. Adidas, like others in its industry, is struggling with excess inventory amid slowing demand for activewear in North America, as well as very unfavorable currency movements. Given that its turnaround continues to be a work in progress, we are lowering our fair value estimates to EUR 163/$88 from EUR 172/$93, leaving shares fully valued.

Price vs Fair Value

ADDYY is trading at a 15% premium.
Price
$101.42
Fair Value
$62.00
Uncertainty
High
1-Star Price
$696.40
5-Star Price
$23.30
Economic Moat
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Capital Allocation
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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 4.5 billion in 2022, or 20% of total sales.

Bears

Adidas was affected by China’s COVID-19 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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News

Trading Information

Previous Close Price
$101.33
Day Range
$100.50101.74
52-Week Range
$73.24109.01
Bid/Ask
$99.47 / $102.65
Market Cap
$36.22 Bil
Volume/Avg
16,031 / 53,376

Key Statistics

Price/Earnings (Normalized)
922.61
Price/Sales
1.56
Dividend Yield (Trailing)
0.38%
Dividend Yield (Forward)
0.38%
Total Yield
1.07%

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 2,000 owned retail stores, 15,000 mono-branded franchise stores, 150,000 wholesale doors, and owned e-commerce that is available in 65 countries. The company was founded in 1949 in Germany.
Sector
Consumer Cyclical
Industry
Footwear & Accessories
Stock Style Box
Large Growth
Total Number of Employees
57,334

Competitors

Valuation

Metric
ADDYY
UAA
PUM
Price/Earnings (Normalized)
922.6114.1321.88
Price/Book Value
6.571.782.34
Price/Sales
1.560.700.71
Price/Cash Flow
45.498.878.65
Price/Earnings
ADDYY
UAA
PUM

Financial Strength

Metric
ADDYY
UAA
PUM
Quick Ratio
0.571.180.68
Current Ratio
1.292.131.61
Interest Coverage
−4.0277.129.08
Quick Ratio
ADDYY
UAA
PUM

Profitability

Metric
ADDYY
UAA
PUM
Return on Assets (Normalized)
0.47%5.88%5.85%
Return on Equity (Normalized)
1.81%14.17%15.54%
Return on Invested Capital (Normalized)
0.85%8.23%11.57%
Return on Assets
ADDYY
UAA
PUM
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Footwear & Accessories Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
NKE
Nike Inc Class BFmg$154.4 Bil
ADDDF
adidas AGWnkqcq$36.1 Bil
DECK
Deckers Outdoor CorpDtg$23.2 Bil
ONON
On Holding AGMqwgx$11.0 Bil
SKX
Skechers USA Inc Class AFzwck$9.6 Bil
BIRK
Birkenstock Holding PLCYzydfb$9.0 Bil
ASCCY
ASICS Corp ADRWgjrtj$7.8 Bil
ASCCF
ASICS CorpQvzfsm$7.8 Bil
CROX
Crocs IncChnyyl$7.6 Bil

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