reports
- John Brick
- CFA
Adidas Continues Its Robust Growth, but Where Does Further Margin Upsi...
There is no denying that Adidas continues to fire on all cylinders, as it posted first-quarter results showing strong sales and subsequent leverage of expenses that place the firm tracking moderately above our full-year estimates. Currency-neutral sales were up 10% (2% including foreign currency), on top of the 16% (19% including foreign exchange) posted last year, which aligns with our full-year 10% top-line estimate. However, these sales better leveraged the firm’s expense base, resulting in...
- John Brick
- CFA
Adidas’ brand equity continues to resonate across the globe as consu...
Narrow-moat Adidas posted fourth-quarter results that showed a continuation of strong sales and a subsequent leverage of expenses, as consumers opt for its on-trend athleisure wear. Currency-neutral sales were up 19% (12.4% including foreign exchange) for the quarter, on top of 12% growth last year, and gross margins increased 220 basis points to 51.7%, which placed full-year 2017 in line with our expectations. Amid continued competition, management expects this trajectory to continue, as eviden...
- John Brick
- CFA
Adidas’ brand equity continues to resonates globally as consumers op...
Narrow-moat Adidas reported third-quarter results that continue to place the firm on track to meet our full-year assumptions that call for currency-neutral sales growth of 13%, gross margins that increase 140 basis points to 50%, and operating income margin around 9%. Despite results continuing to show strong growth and margin expansion in recent periods, we view the company as a beneficiary of short-term fashion trends and think that this pace of growth is unsustainable. Within this framework, ...
- John Brick
- CFA
Adidas Continues to Boast Strong Growth, but Where Is the Upside in Ma...
Narrow-moat Adidas reported third-quarter results that continue to place the firm on track to meet our full-year assumptions that call for currency-neutral sales growth of 13%, gross margins that increase 140 basis points to 50%, and operating income margin around 9%. Despite results continuing to show strong growth and margin expansion in recent periods, we view the company as a beneficiary of short-term fashion trends and think that this pace of growth is unsustainable. Within this framework, ...
- John Brick
- CFA
While Adidas Is Far From a Bargain, Investors May Want to Stock Up on ...
Although we view the athletic apparel, footwear, and equipment space as highly competitive, we think these headwinds are priced in and view wide-moat Nike and narrow-moat Under Armour as offering a favorable risk/reward opportunity, each trading at a 20%-30% discount to our valuation. Further, we still think the competitive advantages stemming from solid brands and the resulting pricing power should ultimately ensure each withstands these pressures and delivers excess returns to shareholders lon...
- John Brick
- CFA
While Adidas Is Far From a Bargain, Investors May Want to Stock Up on ...
Although we view the athletic apparel, footwear, and equipment space as highly competitive, we think these headwinds are priced in and view wide-moat Nike and narrow-moat Under Armour as offering a favorable risk/reward opportunity, each trading at a 20%-30% discount to our valuation. Further, we still think the competitive advantages stemming from solid brands and the resulting pricing power should ultimately ensure each withstands these pressures and delivers excess returns to shareholders lon...
- Jaime Katz
Adidas' solid brand equity is bolstering strong growth despite competi...
Adidas’ strong second-quarter report of earnings growth tracks ahead of our long-term outlook, with currency-neutral sales growth of 19% (versus our 2017 estimate calling for 12%) and gross margins increasing 70 basis points to 50.1% due to positive pricing, channel, and mix (ahead of our 49.1% 2017 estimate). However, we continue to view the company as a beneficiary of shorter-term fashion trends and think that this growth rate is unsustainable in the long term. Therefore, we will likely rais...
- Jaime Katz
Adidas Remains on Track for a Solid Year; Shares Rich
Adidas’ strong second-quarter report of earnings growth tracks ahead of our long-term outlook, with currency-neutral sales growth of 19% (versus our 2017 estimate calling for 12%) and gross margins increasing 70 basis points to 50.1% due to positive pricing, channel, and mix (ahead of our 49.1% 2017 estimate). However, we continue to view the company as a beneficiary of shorter-term fashion trends and think that this growth rate is unsustainable in the long term. Therefore, we will likely rais...
- Jaime Katz
Adidas is on track for another strong growth year linked to improving ...
After posting double-digit sales and EPS growth in 2016, narrow-moat Adidas’ first-quarter results, which included 16% currency-neutral revenue growth and operating margins expanding 90 basis points, leave it on track to deliver another banner year. We believe the firm should experience continued momentum as fashion trends remain spot on and merchandising resonates well with consumers, which is captured in our outlook calling for sales growth of 12% and EPS growth of 24% in 2017. We expect sal...
- Jaime Katz
Adidas Group on Track to Deliver Solid 2017 Growth; Shares Remain Rich
After posting double-digit sales and EPS growth in 2016, narrow-moat Adidas’ first-quarter results, which included 16% currency-neutral revenue growth and operating margins expanding 90 basis points, leave it on track to deliver another banner year. We believe the firm should experience continued momentum as fashion trends remain spot on and merchandising resonates well with consumers, which is captured in our outlook calling for sales growth of 12% and EPS growth of 24% in 2017. We expect sal...
- Jaime Katz
Adidas is on track for another strong growth year linked to improving ...
Narrow-moat Adidas closed on another strong year in 2016, with currency neutral revenue rising 18%, as merchandise has been spot on across major categories and regions. The firm benefited from strength in the Adidas brand (up 22%) but also sport performance, originals, and neo, which generated double-digit improvement. Core regions, including Western Europe, North America, and Greater China all experienced growth above 20%. We plan to raise our $96 fair value estimate materially to account for ...
- Jaime Katz
Adidas on Track for Another Strong Growth Year Ahead; Shares Rich
Narrow-moat Adidas closed on another strong year in 2016, with currency neutral revenue rising 18%, as merchandise has been spot on across major categories and regions. The firm benefited from strength in the Adidas brand (up 22%) but also sport performance, originals, and neo, which generated double-digit improvement. Core regions, including Western Europe, North America, and Greater China all experienced growth above 20%. We plan to raise our $96 fair value estimate materially to account for ...
- Jaime Katz
Heightened Postelection Uncertainty Presents Long-Term Investors With ...
Despite the potential for near-term stock market volatility resulting from Donald Trump’s unexpected presidential victory, in general, the longer-term impact is far from clear at this point. Overall, we think heightened levels of uncertainty could create attractive buying opportunities for long-term investors interested in building a position in competitively advantaged global consumer names. Specifically, we believe the election results have not changed the longer-term cash flow profiles of n...
- Jaime Katz
Strong Growth Continues at Adidas, but Shares Are Overvalued
Narrow-moat Adidas has been on a tear this year, delivering solid currency-neutral double-digit growth across key categories, including football, running, training, originals, and Neo. Strong currency-neutral growth also continues with the Reebok and Taylor Made brands and in all major geographies, as only Russia (with mid-single digit growth) has not grown revenue at a double-digit rate year-to-date. We recently raised our fair value estimate to EUR 96, which we plan to maintain after another r...
- Jaime Katz
Adidas products continue to cater to evolving trends, strengthening br...
Despite strong first-half results for Adidas, we don’t see any change in our EUR 81 fair value estimate, as sales are tracking to our 2016 model and our long-term cash flow forecast is little changed. Although investors have bid up the shares to levels we see as overvalued, the near term has gotten a boost from sporting events while in our valuation model positive near-term implications for gross margin have been offset by investments in fixed assets and increases in inventory. Furthermore, im...
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