Numbers Analysis: Hennes & Mauritz AB (HM B)

Hennes & Mauritz AB is a multibrand fashion company. Its flagship is the brand H&M, which stands for the majority of the revenue. However its new brands (such as COS, & Other Stories, Monki, Weekday and Arket) are growing faster. H&M has a strong market position globally. The company was originally founded in 1947 and has its main office in Stockholm, Sweden.

Chart

Statistics

Year20102011201220132014
ROIC58.7%47.1%50.3%50.0%53.1%
Sales (MSEK)108483109999120799128562151419
EPS (SEK)11.299.5610.1910.3312.97
Equity (MSEK)4417244104438354524851556
Cash flow from current operations per share13.1910.5311.4214.414.6
P/E2122212726
Year20152016201720182019
ROIC49.3%39.2%31.0%21.2%23.0%
Sales (MSEK)180861192267200004210400232755
EPS (SEK)12.6311.269.787.648.12
Equity (MSEK)5804961236597135854657069
Cash flow from current operations per share14.5414.3613.0412.8617.51
P/E2624202223

Growth Rates

Yearly average10 year5 year1 year
ROIC41%33%23%
Sales Growth Rate9%7%11%
EPS Growth Rate-4%-10%6%
Equity Growth Rate3%0%-3%
Cash Flow Growth Rate3%5%36%

Calculations using historic growth rates and different P/E

Growth rates x 2Average P/EMedian P/E
P/E623.522.5
Calculated future price in 10 years65253246
Calculated Price (fair value)166361
Margin of Safety (50%)83231

Current price: 137.05 SEK

ROIC-numbers are great. Sales are pretty good. EPS is not growing. The historic Equity Growth rate of 3% is on the lower side which brings down the price calculations. Above numbers suggest that H&M is overvalued.

To be considered for further analysis, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are not.

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