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People pass a advertising board with the new Adidas NMD model at the flagship store in Berlin, Germany, January 20, 2016. A combination of new and retro sneaker styles will keep driving growth at Adidas's fashion business and help attract more sports fans too, the head of the German firm's Originals unit said in an interview. Picture taken January 20, 2016.
Reuters/Hannibal Hanschke
Investors are feeling good about Adidas.
HIGH HOPES

Investors think Adidas should be as richly valued as Nike, for the first time in a long time

By Marc Bain

After years of struggle, Adidas is feeling optimistic. Today (Feb. 11), the German sportswear company announced better-than-expected sales in 2015. Sales rose 16% to €16.9 billion ($19.2 billion), driven by double-digit percentage growth in Western Europe, China, and Latin America. The company also hiked its earnings forecast for 2016.

Adidas’s investors are also optimistic. As Bloomberg reports, Adidas’s price-to-earnings ratio has closed the gap with Nike’s for the first time in a long while. The German group’s shares have been on a tear since mid-January, when it announced that Kasper Rorsted, CEO of German company Henkel, will succeed Adidas’s current chief, Herbert Hainer, later this year.

Price-to-earnings ratios are a somewhat fuzzy measurement—Bloomberg’s data shows that Adidas has already caught up with Nike, while the numbers from financial-research firm FactSet show Adidas still trailing slightly. In either case, Adidas has substantially closed a long-standing valuation gap with its main rival.

Though it’s number two in global market share after Nike, Adidas still lags far behind in sales. Nike generated $30.6 billion in sales lsat year, and plans to boost that to $50 billion by 2020. In the US, the world’s largest sportswear market, Adidas has just a fraction of Nike’s market share, and fell behind mom-approved brand Skechers last year.

But Adidas has been firing on all cylinders lately, introducing new items, such as a new sneaker engineered specifically for women, focusing on innovation with products including a 3D-printed sneaker midsole, and increasing its sponsorship of US athletes.

It has seen sales start to turn around in the US, and expects the momentum to continue in 2016. Now it seems investors do, too.

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