At €44.14, Is It Time To Put Zalando SE (ETR:ZAL) On Your Watch List?

By
Simply Wall St
Published
April 14, 2022
XTRA:ZAL
Source: Shutterstock

Zalando SE (ETR:ZAL) saw significant share price movement during recent months on the XTRA, rising to highs of €73.02 and falling to the lows of €43.50. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Zalando's current trading price of €44.14 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Zalando’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Zalando

What is Zalando worth?

Great news for investors – Zalando is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is €56.11, but it is currently trading at €44.14 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Zalando’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Zalando look like?

earnings-and-revenue-growth
XTRA:ZAL Earnings and Revenue Growth April 14th 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Zalando's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since ZAL is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on ZAL for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ZAL. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Zalando at this point in time. Every company has risks, and we've spotted 1 warning sign for Zalando you should know about.

If you are no longer interested in Zalando, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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