Inditex's earnings results are worse than expected
During today's trading day, and before the market opened, the Spanish textile giant based in Arteixo with thousands of stores throughout the world has announced its earnings results for the 2020 financial year.
These results were not positive, showing a 70% decrease in profit, which have been weighed down by the pandemic and restrictions imposed. Profits amounted to 1.1 billion euros, although the most worrying fact is the decrease in net profit during the fourth quarter, with a decrease of 53% compared to the previous year, despite the Christmas season.
These results are below analysts' forecasts of a 62.9% drop. Despite this, the company has announced an increase in its dividend to 70 cents per share.
On the positive side, in order to face the pandemic and restrictions, as of brands such as Zara, Pull & Bear, and Stradivarius, Inditex increased their online presence over the past year, expanding the company's nine brands to an online presence in 216 markets. This expansion led to strong growth in online sales, accounting for 27% of the sales volume of the entire business.
Technically speaking, Inditex is trading in an area close to 29 euros per share in an upward momentum that began at the end of last January at 24.36 euros per share, which helped it overcome its resistance level of 28.30 euros per share, and mark annual highs and levels not seen since February 2020. Despite this, still below the levels at which it traded before the start of the Covid-19 pandemic.
After these results, it is to be expected that the price will make some correction, although due to positive future prospects from the vaccination process and eventual economic improvement, it is possible that this will come to pass or will not be very strong. Therefore, it is very important to watch its behaviour during the coming trading days, and see if it is able to maintain its support levels to continue its current uptrend.
Source: Inditex daily chart, Admiral Markets MetaTrader 5 platform from November 15, 2019, to March 10, 2021. Taken on March 10 at 1:00 p.m. CET. Note: Past performance is not a reliable indicator of future results, or future performance.
Price evolution of the last 5 years:
- 2020: -17.20%
- 2019: 40.71%
- 2018: -23.05%
- 2017: -10.44%
- 2016: 2.33%
With the Admiral Markets Trade.MT5 account, you can trade Contracts for Differences (CFDs) of Inditex and more than 3000 stocks! CFDs allow traders to try to profit from the bull and bear markets, as well as the use of leverage. Click on the following banner to open an account today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
- With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- The Analysis is prepared by an independent analyst, Roberto Rojas (analyst), (hereinafter “Author”) based on their personal estimations.
- Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
- Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.