Question

In relation to these measurements/risks is YOUR company in line with their industry?

Are investors taking more risk with YOUR company?

How is YOUR company performing?

Would you invest in this company? Why or why not?

Your POST must be at least 500 words

COMPANY IS ADIDAS

Answer 1

Yes, the company is in line with its industry as Adidas is a leader of today’s sportswear industry with its core competencies being footwear and apparel. Adidas employs various strategies to remain competitive in the industry against powerful companies like Nike. The industry is strongly defined by high levels of competitive rivalry, among other forces. Adidas is directly affected by various factors in their external environment such as political, economic, social, technological and environmental factors. It also has various opportunities and threats that affect its external environment and help determine the company’s success. Adidas’s internal environment explains the basis of their strategic decisions and why certain aspects have and have not worked. Adidas has a set of strengths and weaknesses that contribute to its performance. Through a set of strategic decisions made by strong company leadership, Adidas remains above average within its industry. Adidas’s future is contingent upon their ability to improve profits and take risks that lead to great rewards.

Yes, the investors are taking more risks with the company because Adidas shares have also outperformed the overall market, while Nike’s shares have moved in line with the market. Comparing the two stocks is tricky as Nike has outperformed Adidas over a three-year period, the company lags behind its competitor over a five years period. At any rate, Adidas has emerged as a serious contender of Nike both on Wall Street and Main Street. In several ways, one of them is the expansion of the scale and scope of its operations, which now consist of Adidas, Reebok, TaylorMade and Runtastic, which has pushed Adidas' gross margins well above those of NIKE's. Consumers in the 15-30 age range are targeted with new products that create instant sales bonanzas. Ultraboost sold 11,000 pairs in the first hour. Marketing buzz is also fueled by the innovative ways Adidas makes its products. Like its Yoga Collection, which is made from recycled ocean plastic. And its AlphaEdge 4D sneakers, which is made by using light and oxygen through a process called Digital Light Synthesis. Adding to the buzz are collaborations and partnerships with celebrities and companies such as Pharell Williams, Run DMC, Kanye West, Bape, and Beyonce.

Adidas is performing very well as it’s financial performance in 2019 was ahead of its industry. In 2019, Adidas delivered another year of robust top-line growth with currency-neutral revenues increasing 6%, despite supply chain shortages which the company had experienced following a strong increase in demand for mid-priced apparel. The company’s sales increase was driven by a 7% improvement at brand Adidas. The company’s gross margin increased 0.2 percentage points to 52.0% (2018: 51.8%). Financial income increased 11% to € 64 million in 2019 (2018: € 57 million). Net income from continuing operations increased 12% to € 1.918 billion in 2019 versus € 1.709 billion in the prior year. As a result of the company’s ongoing share buyback program, basic EPS from continuing operations increased over proportionately at a rate of 15% to € 9.70 from € 8.46 in 2018.

Yes, I will definitely invest in the company because earnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. Double-digit earnings growth is definitely preferable, and often an indication of strong prospects. While the historical EPS growth rate for Adidas is 32.1%. The company's EPS is expected to grow 9% this year, crushing the industry average, which calls for EPS growth of 8.8%. Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. Right now, year-over-year cash flow growth for Adidas is 19.3%, which is higher than many of its peers. In fact, the rate compares to the industry average of 9.3%.