The mood is undoubtedly reversing Zalando-Del (WKN: ZAL111). In the early trading on Friday, the share was listed at just over 21 euros. It’s really a bit. Even at the already low level.
The reason for this is the announcement of the forecast reduction. The management of the Zalando share said that the outlook for the financial year 2022 was no longer updated. The primary concern is its revenue growth target of 12% to 19% year over year. As well as the adjusted EBIT of EUR 480 to 510 million.
But if the mood turns, how do foolish investors place it then now? Let’s look at three relevant measurements that I at least look at more and more.
Zalando share: 80% sale
A first key figure that is becoming more and more relevant in connection with the Zalando share is the level of the correction. Or crashed. Meanwhile, the stock certificates have lost almost exactly 80% of their market value, starting from their record highs less than a year ago. A lot, no doubt. Although not only the growth crash can be held responsible for this.
But the sale of 80% is now so high that we can probably also say that the mood has already changed in advance. What is happening now may be in the direction of exaggeration. This does not mean that the share price cannot fall further.
However, Zalando shares have fallen sharply. Realizing how deep the sale has gone in the meantime may be crucial to gaining a sense of opportunity and additional risks.
Sales 10.4 billion euros, EBIT of 180 million euros?
Another set of key figures, on the other hand, relates to the current forecast for the Zalando share. Management has narrowed the targets for the current year. In addition to sales and adjusted EBIT, this also affects gross product volume and other things. But let’s stick to the essentials for a moment.
The management of Zalando now expects a turnover of EUR 10.4 billion and will remain a group that generates double-digit billions a year and is therefore a major player in e-commerce. In addition, the financial year 2022 also appears to remain profitable, at least measured by profit before interest and tax. We have to see if this also applies to the net result.
But it shows me in particular that the sale was perhaps a bit exaggerated. Especially when we finally look at the valuation, which is approaching deep value range.
Zalando parts: KUV and P / E!
The Zalando share currently has a market value of less than 6 billion euros, which means that the price-to-sales ratio is now less than 0.6. Although it may seem justified for a moment if there was no further growth. However, e-commerce is likely to remain a medium- to long-term growth market. The ecosystem is strong and large, and there is still room for expansion in Europe.
But that’s not all. With an earnings per. share of EUR 0.91 in 2021, the price-earnings ratio would currently only be 23. With a net margin of 2.2%, that is a low figure for me. After focusing on growth and with more focus on results, the e-commerce player should probably be able to squeeze a few percentage points more out in the medium to long term.
The Zalando stock is therefore cheap in many ways. Both in terms of sales and forecasts and evaluation. But there is the problem that there is a possibility of stagnation in a changing consumer climate. Decide for yourself what consequences you want to draw.
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Vincent owns shares in Zalando. The Motley Fool owns shares in and recommends Zalando.