Out in front: another beat In Q3 Puma delivered its record absolute quarterly profit and a high quality consensus beat. It also pushed forward its strategy by signing Neymar Jr and LaMelo Ball as endorsers, announcing a new women''s platform and continuing to invest in infrastructure. Q4 has started strongly: of course, pandemic risks abound, but we still see Puma as an outperformer. Q3 results: a personal best Q3 EBIT of EUR 189.5m was Puma''s record in a quarter, and beat consensus by 11% despite the bar being raised heading into the results. The quality was high, with sales, EBIT margins, inventory, net cash and earnings all better than expected. Although Asia Pacific was disappointing during the quarter, it is clear that China has been improving since a low point in August. Q4 outlook: up for the challenge The welcome news is that growth in October has been double-digit, the product pipeline is strong, the order book for the next 9-12 months is good, and inventory levels are in a healthy place. If its major territories avoid second lockdowns and retailers don''t cancel orders then the upgrade agenda should continue and the brand looks very well set for 2021. Visibility remains low, however. Valuation: still an undervalued player We nudge up our full year forecasts and target price by 1%, and also set out 15 questions for management. We continue to see attractive sales and margin potential. Puma trades on a CY21 P/E premium to Adidas (c.39.5x vs c.30.2x) but on CY22 forecasts we think Puma remains attractively valued (27.7x vs 24.4x). This is supported by DCF valuation which assumes long term margins of 13%, just 100bps higher than Puma achieved this quarter.