It’s not too late for the Zalando stock!

that Zalando-Shares (WKN: ZAL111) are rising again. The e-commerce player has recently reached a very low low of 20.94 EUR. Since then, however, it has gone almost straight up to 27.12 EUR. It may seem like a bit, especially when we consider that the record was € 105.90. But that still equates to a plus benefit of 29.5% within a few days.

If you now look at the Zalando stock and are annoyed, it is partly understandable. The much more important message, however, is that it is not too late for this exciting stock. Valuation, growth and market position continue to show that the investment dissertation is intact. With a small damper.

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Zalando part: So not too late!

Maybe we start with the basic valuation, which certainly justifies this assessment. The Zalando share is currently priced at a market value of EUR 7.08 billion. With an annual turnover of 10.4 billion euros at the latest, the price-to-sales ratio is 0.68. I tend to say, at least up to a value of 1: It’s not too late. So now there might even be a safety margin. Or a discount that the stock price can still regain.

With the most recently reported earnings per. share of EUR 0.91, the Zalando share would also have a price earnings of 29.8. That’s probably the crux of the matter for many investors: due to collapsing profitability, they can not see if this is sustainable. Or whether a new series of losses will begin in times of inflation and rising costs.

Ultimately, this is and will be a relevant issue. But we can see that management wants to move in the direction of profitability. For example, with the new feature that only orders over 24.90 EUR are sent free of charge. That, of course, is a risk. But a move that can yield more positive results and lower costs that the e-commerce player carries. As such, profitability is now a top priority.

It is still unknown how active customers, average orders and the shopping basket will develop for the Zalando share. Generally due to the market environment in times of inflation but also with regard to these news. Nevertheless, the name remains a leader in e-commerce and fashion with a large, intact ecosystem.

Still priced after conservatism

To me, the Zalando stock is above all one thing: Very conservatively priced despite a price increase of 29.5%. To me, it represents a safety margin that offers potential and is still too high. There are questions, especially profitability. But: The basic business model is intact and still provides plenty of room for growth. For me, at least, that’s the primary point of view I’m going for.

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Vincent owns shares in Zalando. The Motley Fool owns shares in and recommends Zalando.

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