In it Zalando-Stock (WKN: ZAL111) experienced a fairly strong price increase on Thursday this week. The reason, of course: fresh figures that have shown that the fear was exaggerated. As a maximum sign of confidence, management has confirmed the medium-term forecast up to the year 2025, according to which a gross merchandise volume of EUR 30 billion should be possible at that time.
Zalando shares climbed to a share price of over 30 euros. Of course, this is still a low level. However, we could have crossed the valley of tears at least in the coming days or weeks. Share prices below 30 euros may not be realistic in the long term. Let’s look at three exciting indicators to support this.
Zalando share: It stays cheap!
First, Zalando stock continues to be very, very cheap. Even after the price increase, the market value is EUR 8.2 billion. That means the price-to-sales ratio is probably only 0.8 right now. Of course, the days of deals are over. Although we can also argue that any value below 1 KUV seems pretty cheap.
Profitability is currently a building block for the e-commerce player. The net result in the second quarter was almost in the black with earnings per share of EUR 0.05. But the price-earnings ratio on a 2021 basis would be less than 40, which shows me that this could also be pretty cheap for a net margin of around 2%.
In the end, the Zalando stock convinces with a cheap valuation for the possibility of further growth. This is exactly what we will look at in more detail now.
Growth and megatrend intact in the medium term
It sounds almost trivial: But the growth and megatrend of the Zalando share should remain intact. The medium-term forecast with a gross volume of goods of 30 billion EUR and sales of at least 20 billion. EUR should emphasize this. In addition: The price-sales ratio should therefore also be below 0.5 if the management achieves its goals.
E-commerce is the growth market that must work in the long term. Fashion is a segment that is actually timeless and where consumers are also trending towards online shopping. If we follow this path, I am also convinced that the probability of share prices rising is greater than falling at the 30 euro mark.
Zalando share: Not a total disaster
Zalando stock isn’t a total disaster either. The fresh figures show this once again. Once again, the non-financial key figures must also be emphasized. Over 290 million orders and 49.3 million active customers are a very clear indicator of this specialty. This means that the ecosystem is and remains intact and even leading in Europe.
There are of course a few things to point out. For example, that you can grow again and also grow profitably. However, if successful, Zalando shares should remain above EUR 30. A cheap valuation, growth in a megatrending market and a healthy ecosystem are the three attributes I continue to trust.
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Vincent owns shares in Zalando. The Motley Fool owns shares in and recommends Zalando.