It has cost Inditex a lot to compensate for the harmful effects of the pandemic. With a change of course in its business, promoting large stores and closing those with less business as well as focusing the future on online sales, which it considers as has happened during the pandemic, it will be the great future of the textile firm.
Its online sales continue to grow at an interannual rate of 75% until last September and a similar figure, 76% only in its third fiscal quarter of last year. Their estimates reach a 25% increase in sales through the digital channel in 2022. And already at the end of 2020 that exceed the figure of 6.5 billion euros, with forecasts of representing 30% of its sales, in figures from Bloomberg.
However, another question is whether this model will be the predominant one in the future. We already pointed out that Credit Suisse sees it closer to Zalando, even selling its brands on the online platform of the German firm, as it reaches a market penetration that the owner of Zara does not have.
In its quotation graph we see how the value shows no change so far this year and is shown in equilibrium with the market. That in relation to its progress throughout 2021. So far this month the value has risen 6.5% trying to consolidate the 26 euros per share.
“In a valuation by multiples and under estimation for the closing of its fiscal year 2021/22, the market discounts a PER of 24.3v for Inditex, compared to an average of 34v for the selective Ibex 35 companies and against 116v to which its competitor Zalando is listed, ”says María Mira, a fundamental analyst at Ei.
The Investment Strategy expert confirms that “if we relativize the multiple on results with the EPS growth forecast, it results in a very moderate PEG ratio for Inditex, 0.22v, showing the upward potential of the value. The EV / EBITDA ratio remains at historical levels, around 11v for Inditex textile, compared to an already very tight ratio of 40v for Zalando. Also by book value, Inditex would be undervalued compared to its competitor, 5.18v for the Galician Group vs more than 12v for its German competitor ”.
And finally, María Mira adds that “based on our fundamental assessment, the recommendation is positive in the medium / long term. It is a company with a strong positive net cash flow and a very healthy balance sheet. Once the health crisis is over, it will recover growth in sales and profit and it will be strengthened and it is currently cheaper than its competitors ”.
The technical analyst of Investment Strategies, José Antonio González, highlights that Inditex “the rebound from its 200-period simple moving average or long-term has been insufficient to reach previous relative highs, allowing the price to oscillate around its moving average. simple of 40 periods or medium term. With the passage of time, the laterality between 26.80 and 24.34 euros acquires greater relevance “.
Inditex on daily chart with average amplitude range in percentage, MACD oscillator and trading volume
The technical indicators of Investment Strategies mark 4.5 total points out of 10 for Inditex, in rebound mode. On the positive side, we see the long-term trend that is bullish, the long-term volume that is increasing and the medium-term range that is decreasing. The rest, a downtrend in the medium term, a total moment that in its two aspects, in the medium and long term, is negative, also the medium-term volume that is decreasing and the long-term volatility that remains increasing.
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