Hermès International : The revival in interest should continue

09/03/2020 | 02:54am EST

long trade Target price hit

Entry price : 744€ | Target : 786.2€ | Stop-loss : 714.9€ | Potential : 5.67%

Hermès International shares have been in strong demand lately. The technical chart pattern looks positive which may give rise to new gains. Investors have an opportunity to buy the stock and target the € 786.2.

Summary

• The company has strong fundamentals. More than 70% of listed companies have a lower mix of growth, profitability, debt and visibility criteria.
• For a short-term investment strategy, the company has poor fundamentals.

Strengths

• Margins returned by the company are among the highest on the stock exchange list. Its core activity clears big profits.
• Thanks to a sound financial situation, the firm has significant leeway for investment.
• Predictions on business development from analysts polled by Standard & Poor's are tight. This results from either a good visibility into core activities or accurate earnings releases.
• The stock is in a well-established, long-term rising trend above the technical support level at 665.2 EUR

Weaknesses

• The company's "enterprise value to sales" ratio is among the highest in the world.
• With an expected P/E ratio at 69.35 and 48.25 respectively for both the current and next fiscal years, the company operates with high earnings multiples.
• The company is not the most generous with respect to shareholders' compensation.
• The company's sales previsions for the coming years have been revised downwards, which foreshadows another slowdown in business.
• For the last twelve months, sales expectations have been significantly downgraded, which means that less important sales volumes are expected for the current fiscal year over the previous period.
• For the last four months, EPS estimates made by Standard & Poor's analysts have been revised downwards.
• For the last 12 months, analysts have been regularly downgrading their EPS expectations. Analysts predict worse results for the company against their predictions a year ago.
• The appreciation potential seems limited due to the average target prices set by the analysts covering the stock.

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