![]() ![]() Looking Forwardįrom a performance standpoint, I take the view that if Adidas AG is able to continue demonstrating strong growth across Western markets and sales across Greater China rebound significantly as COVID-19 lockdowns are eased - Adidas AG is in a good position to see a strong rebound given that the stock's P/E ratio is trading at a 10-year low relative to earnings. Therefore, while earnings as a whole may have fallen as a result of weak performance in China - the fact that EMEA and North America have continued to see growth is highly encouraging. According to the company - traffic also fell significantly in cities that were not strictly under full lockdowns:Īdditionally, in spite of supply chain issues reportedly having the most impact on the EMEA region, we can see that over 70% of sales were in Western markets - and overall sales growth was 13%. While diluted earnings per share (from continuing and discontinued operations) was down by just over 10% from the same quarter last year - much of this was driven by a drop in sales growth from China. Notwithstanding the recent pressures on the stock as a result of macroeconomic headwinds, I take the view that Adidas AG could be in a good position to see strong upside provided market conditions become less volatile and strong growth in sales and earnings continues. When looking at the performance of Adidas AG from an earnings standpoint - we can see that earnings per share has been rebounding to near levels seen pre-2020, while the P/E ratio itself is at a 10-year low. While the stock came under significant pressure from COVID-19 lockdowns in China due to both a drop in sales as well as supply chain constraints - I wish to assess whether the stock could have room for significant upside from here. ![]() Since then, the stock has seen significant downside: In a previous article back in March, I made the argument that Adidas AG ( OTCQX:ADDYY ) could see potential downside in the short to medium-term as a result of supply chain issues and increasing competition in China. Investment Thesis: I take a bullish view on Adidas AG given an attractive P/E ratio, strong performance across Western markets, as well as anticipated sales from the company's partnership with Foot Locker. ![]()
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