Yes, that one Zalando-The stock (NASDAQ:BLK) stock has had a really strong development. The bottom line is that the shares climbed from a low of 20.94 euros to 29.76 euros at the end of last week. This corresponds to a price increase of 42%. The 30 euro mark seems to be within reach again.
However, Zalando stock should at least continue this successful streak in the medium term. Much of the negative seems to be priced. The odds can outweigh the odds again. If the market pays attention to the right things, a little more performance could be possible. Besides growth, that is another topic at the moment.
Zalando share: simply too low!
Zalando shares have recently fallen too low for my taste. This has also led to an exaggeration in terms of valuation. Seriously, with a price-to-sales ratio below 0.6, the valuation has looked more like a stock that has stagnated. And not as an e-commerce player that has a leading competitive position in the long-term online fashion retail market.
There are reasons why the e-commerce player fell so sharply. It is primarily the financial year 2022 that will not be able to meet the original expectations. Instead of growth, there is more temporary stagnation. Nevertheless, online retailing in the fashion sector remains a growth market. In any case, I believe that growth is significantly more likely than stagnation in the next ten years. But profitability is also possible, management is finally working on it here as well.
The management of the Zalando stock announced that free shipping under 24.90 euros would be discontinued. I think it’s a fair compromise: the price for the minimum order limit is not too low. This should increase the average shopping cart per order. But also minimize the costs of financially frivolous orders. This is a possible milestone on the road to profitability.
All this priced into the Zalando stock is an attractive option for me. Or continue to be a megatrend stock that promises long-term growth charm. But with a price-to-sales ratio of less than 1, it seems priced more towards stagnation.
KUV below 0.8
Moreover, the Zalando share is currently traded at a share price level of less than 0.8. To me, it is also an evaluation measure that allows for stagnation rather than a more likely scenario. But something I just don’t share. Therefore, I see further potential. Even though this DAX share has recently recovered its value to 42%.
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Vincent owns shares in Zalando. The Motley Fool owns shares in and recommends Zalando.