Burberry Share Undervalued Following Earnings: Should You Buy?

ByDawn Pipkin

May 18, 2022
  • Burberry share saw its price moving beyond a descending channel.
  • The firm’s revenue increased by 10% Y/Y basis.
  • The management issued warnings about the slow China market.

The Burberry share recorded sideways movements after the company revealed its trading report. The stock trades under the LON: BRBY ticker. For now, it trades at 1,584p, approximately 2.65% beneath this week’s highest level.

Burberry Earnings

Burberry is a leading luxury brand in the United Kingdom, boasting a market cap of over 6 billion pounds. The company sells products in the United States, UK, China, and other regions.

The firm’s Wednesday report highlighted that Burberry’s revenue for the FY ending in April hiked to 2.8 billion pounds. That comes as its retail comparable store sales noted a 24% increase. Its previous year’s revenue stood at 2.3 billion.

On the other side, the adjusted operating profit climbed to 523 billion pounds, whereas dree cash-flow dropped to 340 million pounds. Also, the company boosted its dividend to 47 pence from 42.5 pence.

Burberry kept its goal of margin expansion and a high 1-digit revenue hike. Nevertheless, it cautioned that the China market go-slow might translate to a significant slowdown for the company.

The CEO stated that Burberry made impressive progress within the past five years to enhance the brand, customer experience, and products in a luxury atmosphere. He revealed plans to build on these foundations and guarantee growth by November interim results.

Experts trust Burberry is a lucrative investment due to the strong brand and that luxury enthusiasts tend to keep buying even amid surged inflation. Moreover, the company sees massive expansion in China, the leading luxury goods customer in the marketplace.

Furthermore, the firm has a reasonable value, with its price-to-earnings ratio at 12.46, lower than the overall market. Simply Wall Street’s DCF valuation metric estimates the firm to be around 37.2% undervalued.

Burberry Stock Price Forecast

According to the 4hr chart, BRBY maintained massive bearishness within the past couple of months. That saw the stock forming a descending channel.

Nevertheless, the share climbed beyond this channel before the trading report. It climbed past the 25- and 50-dau MAs. Meanwhile, the Money Flow Index approaches the overbought region. Thus the stock might keep surging as bulls aim at the crucial resistance at 1,700p.

Editorial credit: Studio Barcelona / shutterstock.com

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