Inditex displays qualities of a high-quality company: in Q3 2026, revenue grew 9.1% and net profit 8.0%, with a net margin of 14.6%. Estimated EPS is expected to advance 9.2% in FY 2027, to €2.364, although the quarterly margin gave up 0.2 p.p. and debt-to-equity increased 5.3% to 0.35. The valuation requires sustained growth: it trades at 28.7x earnings and the estimated 2027 P/E is 25.0x. In addition, the median target offers only 3.3% upside, and the share price is 1.7% below the annual high. Given its cyclical sector and limited implied upside, I will not initiate a position: I am staying out and waiting for a more attractive price.
Inditex: great business, but little margin of safety
Translated automatically from the original in Spanish.