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Adidas AG (ADSGn) - Introduction Adidas AG is a leading global sporting goods company. It designs, develops and markets sportswear and related accessories. Adidas grows its business both organically and through acquisitions. Its most prominent acquisitions include Taylor Made (in 1997) and Reebok (in 2006). Its revenues are well spread across the globe i.e. Western Europe 27%, Asia 27% (of which 11% are in Greater China), North America 23%, Emerging Europe 13%, and Latin America 10%. Its historic EBIT Margins are at around 8%, while the EBIT margin for 2015 is projected to be 10.5% and in 2020, 17.5%. The sportswear industry is expected to benefit from positive structural and demographic tailwinds. In DM , people are tending to spend more money on healthier living and healthy activities while in EM , a growing number of people are trying to mimic a “western” style of living. It can be assumed that the two major players in the field, Adidas and Nike, will continue to have the ability to influence consumer behavior in the years ahead. The key issue for these two global competitors, is to control the cost of inflation. To offset such factors and get ahead of the competition, companies have to implement a greater degree of advanced technologies and robotics, and Adidas is leading the way in this field. Recently Adidas has underperformed the overall market because of a profit warning and lower projections for its 2015 figures. While this announcement is highly disappointing in a positive environment, the longer-term outlook for Adidas remains intact. Through structural improvements (i.e. the increased use of advanced technologies and robotics), the company is aiming to achieve 20% earnings growth by the end of 2020 This target should be achievable as:
At present, Adidas is valued at an 8 year low compared to its most important rival, Nike. Furthermore, the company trades at about a 10% discount to its discretionary peer group on a lease-adjusted EV/EBITDA.
Strengths and weaknesses analysis / Fundamental analysis: Strengths:
Weaknesses:
Company profile, investment opportunity and asset management integration:
Price ranges:
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