- CNBC's Jim Cramer said Wall Street is misjudging On Holding's quarterly results.
- He said Thursday that investors with a long-term horizon should step in and buy shares.
On Holding's stock price has been on a "wild ride" over the past three sessions as investors digested its financial performance in the third quarter ended Sept. 30, Cramer said. However, he stressed that Wall Street's "confusing reaction" to Tuesday's results will prove misguided over time.
"The fast-growing footwear company reported a fantastic quarter with encouraging guidance and I think the stock is a screaming buy when you remember how much it's pulled back over the past three months," Cramer said, referring to its roughly 26% drop since its 2023 closing high on Aug. 9.
"As I see it, you're getting a terrific quarter for free. What's not to like?" Cramer asked rhetorically.
On Tuesday, shares of On Holding dropped 3.4% as investors first chewed over the report. That was followed by an 8.3% rebound Wednesday, and a 2.3% drop Thursday. Overall, since Monday's close before earnings, On Holding stock has climbed 2% — roughly in line with the S&P 500 over that time.
Cramer said sellers may be concerned that some of On Holding's strong third-quarter results were actually pulled in from the fourth quarter. However, Cramer contended that the timing of sales shouldn't really matter for investors with longer time horizons.
What's more important is that On Holding's full-year sales outlook calls for 46% growth, up from the 39% the firm guided for at the beginning of the year, Cramer said. "No need to sweat the small stuff when the underlying story is this good," Cramer said.
Comments that implied On Holding is being less aggressive about selling its shoes at third-party stores could be another factor behind the stock's up-and-down performance this week, Cramer said. But he said those concerns also are overblown because On Holding's business strategy prioritizes direct-to-consumer sales.
"I feel pretty confident saying that On Holding's likely going have a strong holiday season, allowing it to top its somewhat conservative forecast," Cramer said. "In retrospect, I think all of the handwringing we saw on Tuesday will look downright silly."
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