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  • H&M – Quick analysis of Q2 report

    Posted on June 25th, 2009 Peter Tjernström No comments

    H&M’s Q2 report came in better than we expected and slightly better than the analyst consensus. Sales were in line with consensus, but the gross margin was 0,9 percentage points better than expected, which contributed to an EPS 2,5% higher than expected.

    H&M has once again proven that it can deliver good results in a difficult market environment. I must admit having taken a too negative view of the company’s possibilities to deliver on this level given the tough market. I am updating my estimates for the coming two quarters based on the report and the information given today (see table below). The DCF analysis now yields a FV of 376 SEK, which is exactly at the level where H&M is traded at the moment. One of the most important investment rules is to swallow your pride when you’re wrong and limit the loss. Hence, I closed the short position at 376 SEK this morning and thus took a 3,6% loss.

    hm_performance_and_estimates_0809_post_q2

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