Assessing 361 Degrees International (SEHK:1361) Valuation After Strong Q3 Retail and E-Commerce Sales Growth

361 Degrees International (SEHK:1361) just posted its third quarter sales update, showing about 10% year-on-year retail sales growth for both core and kids brands. E-commerce sales climbed about 20% compared to last year.

See our latest analysis for 361 Degrees International.

The strong third quarter sales update follows a solid year for 361 Degrees International, with the stock climbing 41% year-to-date and delivering a remarkable 57% total shareholder return over the past 12 months. Momentum has been building as upbeat sales results and robust e-commerce growth have clearly fueled renewed investor optimism. This is reflected in an impressive 104% three-year total return and a 605% gain over five years.

If this kind of sustained performance piques your interest, now’s a great time to broaden your investing horizons and discover fast growing stocks with high insider ownership

With growth and recent returns this strong, investors now face a key question: is 361 Degrees International still undervalued after its rally, or has the market already factored in its future performance?

Price-to-Earnings of 9.3x: Is it justified?

361 Degrees International trades at a price-to-earnings (P/E) ratio of 9.3x, which suggests the market is putting a relatively low premium on its earnings compared to both peers and the broader industry. With the latest close at HK$5.95, this multiple positions the stock as attractively valued relative to competitors.

The P/E ratio measures how much investors are willing to pay per dollar of earnings. For a consumer durables company in Hong Kong’s luxury segment, the P/E helps put today’s price tag in the context of past and projected earnings strength.

This ratio may signal that the market is cautious about the company’s growth outlook, or sees potential in its future earnings and has not fully priced it in yet. When compared to its sector, the P/E looks compelling for value-oriented investors seeking growth at a reasonable price.

361 Degrees International’s P/E of 9.3x is below both the peer group average of 34.7x and the Hong Kong luxury industry average of 9.5x. This comparison underscores that the market is undervaluing the company’s earnings relative to similar businesses, while also keeping it in line with the wider industry. The estimated fair P/E ratio is 9.7x, which adds further support to the idea that the market may have room to recognize more value here.

Explore the SWS fair ratio for 361 Degrees International

Result: Price-to-Earnings of 9.3x (UNDERVALUED)

However, continued strong performance is not guaranteed. A slowdown in e-commerce growth or changing consumer demand could challenge the current momentum.

Find out about the key risks to this 361 Degrees International narrative.

Another View: What Does Our DCF Model Say?

Taking a different approach, the SWS DCF model estimates 361 Degrees International’s fair value at HK$7.50 per share. The stock trades at HK$5.95, which means the shares are currently trading around 20.6% below their intrinsic value. This suggests room for potential upside.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out 361 Degrees International for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own 361 Degrees International Narrative

If you have your own perspective or prefer hands-on analysis, try crafting a personalized view of 361 Degrees International by exploring the data for yourself. You can Do it your way in just a few minutes.

A great starting point for your 361 Degrees International research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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