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Hennes & Mauritz AB Class B HM B

Morningstar Rating
SEK 185.25 +2.10 (1.15%)
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Company Report

H&M's Profitability Should Improve in 2023 As Cost Pressures Decrease

Although we still believe that Hennes & Mauritz, or H&M, (the world’s second-largest fashion company in terms of revenue) benefits from scale advantages and brand recognition, we think these are no longer sufficient to guarantee medium- to long-term economic profits in an increasingly competitive environment, hence our no-moat rating for the company. Further, the company's responsive supply chain initiatives seem to no longer be working, as sales faltered and inventory days grew from about 117 in 2015 to 140 days in 2022, while fixed store costs are becoming an increasing drag on profitability as store traffic falls in mature markets.

Price vs Fair Value

HM B is trading at a 439% premium.
Price
SEK 184.45
Fair Value
SEK 732.00
Uncertainty
Medium
1-Star Price
SEK 275.60
5-Star Price
SEK 787.00
Economic Moat
Bbmbx
Capital Allocation
Rbvgnbfcz

Bulls Say, Bears Say

Bulls

H&M benefits from scale advantages against smaller peers as the number-two apparel supplier in Europe and number three globally.

Bears

H&M may be too slow in trimming its store base, which could present a drag on profitability as business shifts online and store productivity falls.

Is it the right time to buy, sell, or hold?
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Trading Information

Previous Close Price
SEK 183.15
Day Range
SEK 182.80186.30
52-Week Range
SEK 137.10189.90
Bid/Ask
SEK 185.20 / SEK 185.30
Market Cap
SEK 298.35 Bil
Volume/Avg
427,819 / 2.6 Mil

Key Statistics

Price/Earnings (Normalized)
31.91
Price/Sales
1.28
Dividend Yield (Trailing)
3.47%
Dividend Yield (Forward)
3.47%
Total Yield
3.89%

Company Profile

Hennes & Mauritz is a global multibrand fashion conglomerate that was founded in 1947. Its flagship H&M brand accounts for most of revenue, but the newer brands (COS, &Other Stories, Monki, Weekday, and newly launched Arket) are growing a bit faster. H&M commands low-single-digit market share in a fragmented global apparel market. Just under 70% of revenue is generated in Europe and Africa, 14% in Asia and Oceania, and 23% in North and South America. The company operates around 4,400 stores globally of which 3,947 are H&M-brand stores.
Sector
Consumer Cyclical
Industry
Apparel Manufacturing
Stock Style Box
Large Core
Total Number of Employees
101,103

Competitors

Valuation

Metric
HM B
ITX
URBN
Price/Earnings (Normalized)
31.9125.6812.67
Price/Book Value
6.388.081.84
Price/Sales
1.283.890.77
Price/Cash Flow
9.6916.235.69
Price/Earnings
HM B
ITX
URBN

Financial Strength

Metric
HM B
ITX
URBN
Quick Ratio
0.601.100.56
Current Ratio
1.201.471.33
Interest Coverage
9.52
Quick Ratio
HM B
ITX
URBN

Profitability

Metric
HM B
ITX
URBN
Return on Assets (Normalized)
5.25%17.13%7.80%
Return on Equity (Normalized)
19.88%32.77%15.69%
Return on Invested Capital (Normalized)
9.19%24.36%9.67%
Return on Assets
HM B
ITX
URBN
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Apparel Manufacturing Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Hennes & Mauritz AB Class B
HMRZF
Dnghb$28.1 Bil
Hennes & Mauritz AB ADR
HNNMY
Zfwkrg$28.1 Bil
Moncler SpA
MONRF
Fdp$17.6 Bil
Ralph Lauren Corp Class A
RL
KwhbpqlwNclgj$11.4 Bil
PVH Corp
PVH
BwzwbtnnWjpk$6.8 Bil
Gildan Activewear Inc
GIL
TffrrjypgSbcb$6.4 Bil
VF Corp
VFC
NknxvbnxKtmldgl$5.3 Bil
Under Armour Inc Class A
UAA
RlqcpfktnKrjn$2.9 Bil
Under Armour Inc Class C
UA
DjtrsxkfpBtyk$2.9 Bil
Hanesbrands Inc
HBI
RzylkpqtLtfynk$1.8 Bil

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