Expecting another tough work out through earnings season The sporting brands have had it tough: inventory shortages, geopolitical challenges in China now compounded by lockdowns, rising costs that require price hikes, and an uncertain consumer backdrop. The distributors face concerns around disintermediation as the brands move Direct to Consumer. Here we tackle the 10 tough questions investors pose for Adidas, JD Sports and Puma. We think investors will need to remain patient but, when the dust settles, we see value in the sector. Adidas (+): Q1 due on 6 May The key debate for Adidas is its brand heat. So far we see no momentum in social media data, but think that its product pipeline will make a difference in H2 and 2023. China remains its headache-market, but some of its self-help actions should start to help. These could drive a rerating: Adidas trades on a c.5-year low multiple, implying long term margins below management targets. JD Sports (+): FY due in May The key debate will be difficult to lay to rest: the risk of disintermediation by Nike as it shifts Direct to Consumer. But reassuringly, we find that JD''s access to Nike products, including exclusives, remains industry-leading. With the stock trading on historically low P/E multiples, despite having 13% of its market cap in cash, we expect the upcoming results to reassure and drive a re-rating. Puma (+): Q1 due on 27 April It has been a de-rating story in 2022, in part bond-yield driven. Its brand heat looks good, it has low(ish) exposure to China, and it should capitalise in the US on strong relationships with distributors. It has rarely traded on such low multiples and is pricing in virtually no margin expansion. Are we at the point of maximum pain? Trough multiples, but there are challenges ahead. We trim Adidas and Puma estimates by a further 2% to reflect China''s Covid lockdowns and we sit below consensus. But we favour these sports stocks relative to the rest of our...