<div id="readability-page-1"><div><p>Adidas (XTRA:ADS) posted a net profit margin of 4.9%, up from 1.7% last year, and delivered 217% earnings growth over the past year. The company’s outlook points to revenue growing 7.6% per year and earnings set to rise 21.9% annually, both outpacing the broader German market. With margin gains, robust historic earnings improvement, and forecasts signaling continued profit acceleration, shareholders are likely to keep a close eye on the upbeat numbers and valuation debate.</p> <p>See our full analysis for adidas.</p><p>Now, let's see how the latest results compare with the current narratives that many investors follow, and where fresh numbers could shift the conversation.</p> <p>See what the community is saying about adidas</p> <figure><img height="476" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/company/a06709b2-2f79-4866-a149-1433f175cfb2/chart/earnings-and-revenue-history?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="746" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/company/a06709b2-2f79-4866-a149-1433f175cfb2/chart/earnings-and-revenue-history"/><figcaption>XTRA:ADS Earnings &amp; Revenue History as at Oct 2025</figcaption></figure> <h2>Profit Margins Expected to Climb Toward 8.2%</h2> <ul> <li>Analysts project adidas’s profit margins rising from 4.8% today to 8.2% within three years, outpacing sector growth expectations and underpinning its improved earnings power.</li> <li>According to the analysts' consensus narrative, a mix of accelerating demand in core segments and a global shift to direct-to-consumer sales is seen as powering this margin expansion,     <ul> <li>Consensus notes channel mix improvements such as e-commerce up 9% are expected to gradually shift adidas to higher-margin sales as D2C becomes more important.</li> <li>Margin improvements are further reinforced by premium product launches and sustainability initiatives, which analysts believe enable stronger pricing and brand loyalty.</li> </ul> </li> <li>Love seeing margins expand as scale and D2C gains kick in? Bulls think this is just the beginning. <strong>📊 Read the full adidas Consensus Narrative.</strong></li> </ul> <h2>DCF Valuation Suggests Deep Upside</h2> <ul> <li>adidas’s current share price is €167.45, trading at a steep discount to the DCF fair value of €781.20, and 28.6% below the analyst price target of €234.05.</li> <li>Analysts’ consensus narrative frames this as a potential value opportunity:     <ul> <li>The share price’s wide gap to both modeled fair value and consensus target hints that strong earnings growth and margin improvement have not yet been fully reflected in the stock price.</li> <li>Bears counter that pricing power limits and global risks could justify this discount, but the fundamental valuation gap remains difficult to dismiss given recent performance.</li> </ul> </li> </ul> <h2>Premium Valuation Versus Industry, Discount Versus Peers</h2> <ul> <li>With a price-to-earnings ratio of 24.7x, adidas trades above the European luxury industry average of 20.3x, but below the direct peer average of 32.3x.</li> <li>Analysts’ consensus narrative points out this creates a nuanced perspective:     <ul> <li>While adidas commands a premium to the broad luxury sector given its strong outlook, it still appears relatively attractively priced against major listed competitors, given its global brand momentum and projected earnings growth.</li> <li>This cross-current means investors must weigh the sector premium against peer value, as growth rates and margin trends continue to unfold.</li> </ul> </li> </ul> <h2> Next Steps</h2> <p>To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for adidas on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.</p> <p>Have your own take on the figures above? Put your perspective into action and shape your unique narrative in under three minutes with Do it your way.</p> <p>A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding adidas.</p> <h2>See What Else Is Out There</h2> <p>Despite robust earnings growth, adidas’s valuation remains steep compared to the broader luxury sector. This raises concerns about whether current optimism is already priced in.</p> <p>If you want to find companies trading well below their intrinsic value with similar or better growth prospects, check out these 833 undervalued stocks based on cash flows now.</p> <p><em> This article by Simply Wall St is general in nature. <strong>We provide commentary based on historical data     and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.</strong> It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your     financial situation. We aim to bring you long-term focused analysis driven by fundamental data.     Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.     Simply Wall St has no position in any stocks mentioned.</em></p></div></div>

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<p>Adidas (XTRA:ADS) reported a net profit margin of 4.9%, significantly up from 1.7% last year, alongside a remarkable 217% earnings growth. The company anticipates a 7.6% annual revenue increase and a 21.9% rise in earnings, outpacing the German market. Analysts project profit margins could reach 8.2% in three years, driven by direct-to-consumer sales and premium product launches. Despite a current share price of €167.45, which is below the DCF fair value of €781.20, the stock is seen as a potential value opportunity amid concerns over pricing power and global risks.</p>

Adidas (XTRA:ADS) Net Margin Surges to 4.9%, Underscoring Profit Growth Narrative After 217% Earnings Jump