Is Salvatore Ferragamo (BIT:SFER) Shares Still Fairly Priced After a 25% Surge?

Salvatore Ferragamo (BIT:SFER) shares have delivered a solid stretch of short-term gains this month, rising nearly 25%. This follows a period of weaker performance and has left investors considering what may be fueling the renewed interest.

See our latest analysis for Salvatore Ferragamo.

After a stretch of muted action, Salvatore Ferragamo’s impressive 25% share price surge this month has turned heads, especially given its more subdued performance throughout the past year. While the recent spike has sparked some optimism among investors looking for a turnaround, the 1-year total shareholder return remains negative and long-term returns are still in the red. This suggests that fresh momentum may only just be starting to build.

If this shift in Ferragamo’s fortunes has you curious about where fast growth and strong insider confidence overlap, now’s a great time to discover fast growing stocks with high insider ownership

With shares rebounding this month but the stock still trading below its analyst price target, the big question is whether Salvatore Ferragamo is undervalued or if the market has already priced in the recovery ahead.

Price-to-Sales Ratio of 1x: Is it justified?

Salvatore Ferragamo’s last close at €5.77 puts the stock at a price-to-sales (P/S) ratio of 1x, which suggests the market is pricing the company higher than its industry peers and average sector multiples.

The price-to-sales ratio compares the company’s market value to its annual sales and acts as a key measure for assessing valuation in growth-sensitive sectors like luxury goods, where earnings can be volatile but revenue trends may be more stable.

Compared to the European Luxury industry average of 0.8x, Ferragamo looks expensive, potentially indicating investor expectations for a stronger rebound or premium brand resilience. However, from another perspective, the stock actually trades below its peer group’s P/S average of 2.1x, and significantly below the estimated fair P/S ratio of 1.8x calculated from growth patterns and sector trends. If the market adjusts to this fair value, there is room for the P/S multiple to rise.

Explore the SWS fair ratio for Salvatore Ferragamo

Result: Price-to-Sales Ratio of 1x (ABOUT RIGHT)

However, persistent negative returns over one and five years, along with a recent discount to analyst price targets, suggest potential hurdles remain for Ferragamo’s recovery narrative.

Find out about the key risks to this Salvatore Ferragamo narrative.

Another View: Discounted Cash Flow Perspective

Taking a different approach, the SWS DCF model estimates Salvatore Ferragamo's fair value at €4.79 per share, while the stock recently traded at €5.98. This suggests shares may actually be overvalued relative to their underlying cash flow potential. Which view should investors trust, the simple sales multiple or the deeper DCF calculation?

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 Salvatore Ferragamo 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 Salvatore Ferragamo Narrative

If you see things differently or want to shape your own perspective, it only takes a few minutes to build your own view. Do it your way

A great starting point for your Salvatore Ferragamo research is our analysis highlighting 1 key reward 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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