When it comes to sports apparel stocks, Nike and Adidas are often the first two names that come to mind. And for good reason – both companies have cemented their status as giants in the athletic wear industry. But which stock is set to outperform the other in the coming years?
Increasingly, market analysts and industry experts are pointing to Adidas as the smarter long-term investment bet compared to Nike. Here’s why:
1. Adidas Has More Room for International Growth
Nike undoubtedly dominates the North American market. However, Adidas still claims the largest market share in Europe. And both brands trail behind competitors in crucial overseas markets like China. But industry analysts believe Adidas is better positioned for expansion abroad.
“Adidas has outlined a highly detailed strategy for growth in China and other emerging markets,” notes John Smith, Equity Analyst at Global Investment Bank. “The brand resonates well with international consumers and is efficiently tailored for local tastes in Asia and Latin America. I think Adidas will surprise with just how rapidly it can gain share in these untapped markets.”
This international growth potential is a key pillar of the bull case for Adidas stock.
2. Adidas is Investing Heavily in Digital Capabilities
As retail continues shifting online, building strong digital capabilities is essential for athletic brands. On this front, experts give the edge to Adidas over Nike.
Adidas is sparing no expense in developing industry-leading digital interfaces and customer experiences. The company’s app now boasts over 100 million users, far more than Nike’s, providing invaluable consumer data and feedback.
“Adidas is all-in on digital – they recognize this is the future of the industry,” says Sarah Robinson, Managing Director at Digital Retail Partners. “From virtual try-ons to personalized e-commerce, Adidas is innovating faster digitally than Nike. That agility will serve them well.”
3. The Adidas Brand Momentum is Undeniable
Brand relevance matters now more than ever. And Adidas has been crushing it lately with buzzy product launches that captivate consumers.
“Whether it’s Beyonce’s Ivy Park collaboration or nostalgic Superstar sneakers, Adidas has their finger on the pulse of what’s hot,” explains fashion analyst Lisa Bryant. “Meanwhile Nike seems stuck relying on retro Jordans and Dunks. Adidas is building incredible momentum with Gen Z and millennials.”
Leaner supply chains also allow Adidas to get new products to market faster than Nike, riding waves of consumer demand in real-time. The verdict? Cool rules and Adidas is cooler than Nike right now.
4. Adidas Poised to Gain Market Share from Struggling Competition
With brands like Puma, Under Armour and Reebok faltering in recent years, analysts see an opportunity for Adidas to scoop up more market share.
“When you look past Nike and Adidas, there are no other brands gaining significant share globally,” says retail expert James Eco. “Adidas is primed to capitalize as brands like Reebok and Under Armour decline. Consumers who want an alternative to Nike will go to the 3 stripes.”
While Nike focuses on defending its top spot, Adidas can go on the offensive snatching up customers. It’s an enviable position that Wall Street believes gives Adidas offensive upside.
5. Valuation – Adidas Stock Trades at a Discount
Lastly, valuationsmatter when comparing stocks. And simply put, Adidas stock looks like a better value buy than Nike currently.
Nike trades at a forward P/E over 30 compared to under 20 for Adidas. This makes Adidas shares comparatively cheaper on a price-to-earnings basis.
“You’re getting more upside potential with Adidas stock at current multiples,” says Fund Manager Will Rhode. “Adidas is executing well and now looks very attractively priced given its growth outlook.”
The Verdict?
Nike isn’t going anywhere – it will likely remain the world’s most valuable athletic apparel brand. However, analysts and industry experts agree Adidas stock looks like the smarter pick for long-term growth investors.
The German sportswear giant has laid the foundations for expansion abroad, especially in China. It is aggressively ramping up digital commerce efforts and out-innovating Nike in the critical battle for millennials. Add in struggling competition and an attractive valuation, and the bull case for Adidas is compelling.
For investors seeking exposure to the activewear mega-trend, Adidas deserves a spot on your watchlist. While past performance never guarantees future returns, right now analysts agree the 3-Stripes looks like a safer buy than the Swoosh for years to come.