Core Viewpoint - The comparison between Ermenegildo Zegna N.V. (ZGN) and On Holding (ONON) indicates that ZGN presents a better value opportunity for investors in the Retail - Apparel and Shoes sector [1]. Valuation Metrics - ZGN has a forward P/E ratio of 21.43, significantly lower than ONON's forward P/E of 61.84 [5]. - The PEG ratio for ZGN is 2.20, while ONON's PEG ratio stands at 3.05, suggesting ZGN is more reasonably priced relative to its expected earnings growth [5]. - ZGN's P/B ratio is 3.58, compared to ONON's P/B of 17.01, indicating ZGN is valued more favorably against its book value [6]. Earnings Estimates - ZGN currently holds a Zacks Rank of 2 (Buy), reflecting positive earnings estimate revisions, while ONON has a Zacks Rank of 3 (Hold) [3]. - The stronger estimate revision activity for ZGN suggests an improving earnings outlook compared to ONON [7]. Value Grades - ZGN has been assigned a Value grade of B, whereas ONON has received a Value grade of F, highlighting ZGN's superior valuation metrics [6].

Core Viewpoint - UBS has released a list of preferred stocks in the consumer sector, selecting seven stocks with differentiated investment value based on unique data sources. Group 1: Recommended Stocks - **PepsiCo (PEP.US)** is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for the full year of 2026, making its risk-reward ratio highly attractive among the recommended stocks [1]. - **J.M. Smucker (SJM.US)** is forecasted to achieve an organic growth rate of 5.6%, slightly above the market expectation of 5.5%, driven by strong pricing power in its coffee segment and cost-saving measures [1]. - **Albertsons (ACI.US)** is viewed as having excessive stock price correction, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer lifetime value [2]. - **Dutch Bros (BROS.US)** is expected to continue its upward trajectory, supported by leading store expansion and sales growth momentum projected to last until mid-2026 [2][3]. - **Ulta Beauty (ULTA.US)** is showing strong execution under new leadership, with improved operational efficiency and a favorable competitive environment, which is expected to support its growth momentum [3]. - **On Running (ONON.US)** is focusing on product innovation and maintaining a premium brand position, which is anticipated to lead to industry-leading sales growth and profit margin improvements [3]. - **Peloton (PTON.US)** is rated as a "buy" with a target price of $11, supported by revenue growth and cost optimization, alongside a positive trend in core metrics [4].

Group 1: Consumer Sector Recommendations - UBS has released a list of preferred stocks in the consumer sector, identifying seven stocks with differentiated investment value [1] - PepsiCo (PEP.US) is expected to show significant improvement potential over the next 12 to 18 months, with a projected high single-digit growth in earnings per share for 2026 [1] - J.M. Smucker (SJM.US) is forecasted to achieve an organic growth rate of 5.6%, supported by strong pricing power in its coffee segment, which is above the market expectation of 5.5% [1] - Albertsons (ACI.US) has seen its stock price decline excessively, with its pharmacy business achieving double-digit growth for 15 consecutive quarters, indicating strong customer value [1] Group 2: Growth Potential in Coffee and Beauty Sectors - Dutch Bros (BROS.US) is anticipated to continue its sales and customer traffic growth, with a projected revenue increase of over 20% driven by strong brand recognition and competitive new products [2] - Ulta Beauty (ULTA.US) is expected to maintain its growth momentum under new leadership, with improved operational efficiency and a favorable competitive environment, leading to upward revisions in profit expectations for fiscal year 2024 [2] Group 3: Sports and Fitness Industry Insights - On (ONON.US) is focusing on product innovation and direct-to-consumer expansion, which is expected to lead to industry-leading sales growth and improved profit margins [3] - Peloton (PTON.US) is rated as a 'buy' with a target price of $11, supported by revenue growth and cost optimization, with a key focus on improving subscription user growth despite potential pricing risks [4]

Company Overview - On Holding (NYSE: ONON) is experiencing growth driven by strong international expansion, diversification in its product portfolio, and an increased presence in the direct-to-consumer channel, which is expected to serve as a foundation for future growth [1] Investment Insights - The company is positioned favorably for long-term growth as it focuses on quality and reasonable valuation, aligning with investment philosophies that prioritize fundamentals as the primary driver of share price [1]

Group 1 - On Holding (NYSE: ONON) is experiencing growth driven by strong international expansion, diversification in its product portfolio, and an increased presence in the direct-to-consumer channel [1] - The company's growth strategies are expected to serve as a foundation for future growth [1]

Group 1 - Sands Capital's "Global Growth Strategy" reported a portfolio return of 21.7% in Q2 2025, outperforming the MSCI ACWI index which returned 11.5% [1] - The second quarter results marked the fourth best performance since the fund's inception in 2008, both in absolute and relative terms [1] - The fund's top five holdings can be referenced for insights into its best investment picks for 2025 [1] Group 2 - On Holding AG (NYSE:ONON) experienced a one-month return of -4.91% and a 52-week decline of 15.55%, closing at $43.02 per share with a market capitalization of $14.048 billion on September 16, 2025 [2] - On Holding AG was identified as one of the top individual absolute detractors in the Sands Capital report, alongside Atlassian, Nike, Builders FirstSource, and Carlisle Companies [3] - The number of hedge funds holding On Holding AG decreased from 53 to 42 from the previous quarter, indicating a decline in popularity among hedge funds [4]

Industry Overview - The sportswear industry is experiencing rapid growth, driven by secular trends [1] - On Holding AG (NYSE: ONON) is highlighted as a strong performer within the industry [1] Investment Analysis - The analysis focuses on identifying undervalued stocks with growth potential, emphasizing a fundamental approach [1]

Investment Rating - The industry investment rating is "Outperform" (maintained) [1] Core Viewpoints - The report highlights the rapid growth of the Swiss brand On, which has increased its revenue from 270 million Swiss francs in 2019 to 2.32 billion Swiss francs by 2024, achieving a compound annual growth rate (CAGR) of 54% [2][19] - The brand's market share in the U.S. has significantly increased from 0.2% in 2019 to 1.7% in 2024, indicating strong competitive positioning [25] - On's sales channels are balanced between wholesale and direct-to-consumer (DTC), with 59% of sales from wholesale and 41% from DTC as of 2024 [37] Summary by Sections Company Overview - On was founded in 2010 by former triathlon world champion Olivier Bernhard and has innovatively integrated rubber hose prototypes into running shoe designs, launching products with CloudTec® cushioning technology [2][10] - The brand has expanded globally, entering the U.S. and Japan in 2013 and China in 2018, with a strong focus on the Asia-Pacific region, which is expected to grow by 84% from 2021 to 2024 [19][25] Financial Performance - Revenue growth from 2019 to 2024 is attributed to the brand's global expansion strategy, with the Americas contributing 1.48 billion Swiss francs in 2024, accounting for 64% of total revenue [25] - The gross margin has improved from 54% in 2019 to 61% in 2024, while operating profit margins (OPM) are expected to stabilize between 7% and 10% from 2022 to 2024 [19][11] Product Strategy - On's product line is heavily focused on footwear, which accounted for over 95% of revenue in 2024, with plans to expand its apparel segment significantly in the coming years [62] - The brand's innovative technologies, such as CloudTec® and LightSpray™, are central to its product development, enhancing performance and sustainability [65][64] Marketing and Brand Positioning - On has engaged high-profile athletes, including Roger Federer, to enhance brand visibility and credibility, while also leveraging social media and community engagement in China [3][19] - The brand's marketing strategy includes a focus on professional athletes and community-driven initiatives to penetrate the core consumer base in emerging markets [3][19] Channel Strategy - The company has established a robust wholesale network with 10,500 retail partners globally, while also developing its DTC channels through e-commerce and owned retail stores [29][36] - In China, On has opened multiple retail locations, including a flagship store in Chengdu, aiming to increase its market share significantly [46][47]

Core Insights - The retail sector is showing resilience despite trade tariffs, with companies like Urban Outfitters, Dutch Bros, and On Holdings presenting potential investment opportunities [3][4][5]. Urban Outfitters - Urban Outfitters has a 12-month stock price forecast of $81.91, indicating a 14.80% upside from the current price of $71.35 [4]. - The company reported earnings per share (EPS) of $1.58, exceeding the expected $1.44 by approximately 10% [6]. - Analysts have mixed views, with a consensus Hold rating but some recommending a Buy with a target price of $93, suggesting a potential upside of 38.8% [7]. Dutch Bros - Dutch Bros has a 12-month stock price forecast of $80.06, representing a 12.15% upside from the current price of $71.39 [9]. - The company reported an EPS of 26 cents, surpassing the consensus of 18 cents by 44.4% [11]. - Analysts maintain a consensus Buy rating, with some valuing the stock at $86, indicating a 20% upside potential [12]. On Holdings - On Holdings has a 12-month stock price forecast of $64.20, indicating a 40.60% upside from the current price of $45.66 [13]. - The company is shifting focus to wholesale operations, which may impact short-term cash flow but could enhance economies of scale and profit margins [14]. - The stock is currently rated as a Moderate Buy, with a consensus target of $64.20, suggesting a 42.5% upside potential [14].

Group 1 - The current market trend shows a significant shift as investors are favoring large-cap tech stocks over small and mid-cap growth stocks during the Q2 earnings reporting period for the S&P 500 [1] - Gary Alexander, with extensive experience in technology and startups, highlights the ongoing themes influencing the industry, indicating a strong focus on large-cap technology companies [1] Group 2 - The article emphasizes the importance of understanding market dynamics and investor behavior, particularly in the context of earnings reports and sector performance [1]