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Hennes & Mauritz's 3Q2018 revenue surprise does not paint a full picture

Sep 17, 2018

  • Hennes & Mauritz AB (HMB) reported 3Q2018 revenue growth of +9% Monday that surpassed analyst expectations by 3.46% sending shares up as much as 18%, the stock's highest single-day spike in 17-years.  
  • HMB is preparing for its full quarterly earnings release on September 27, 2018, which will reveal deeper metrics.  
  • As seen below, HMB has observed a downtrend in operating margins and return on equity over the last 5-years. 
  • If HMB does not experience an expansion in operating margins and return on equity in-line with revenue, the company’s long-term viability may be in question. 
  • Hennes & Mauritz AB is rated as ‘top short’ in our European Large-Cap Global Top Picks. 


Source: Bloomberg

 


Source: Bloomberg