Equity valuation of Inditex

Abstract

The market is not always able to reflect a stock’s fair value. Nevertheless, this is not a synonym of market inefficiency given the fact that prices will eventually converge to their real values. In order to get a precise valuation of the company and its fair value, one should perform a valuation and there is a wide range of valuation tools available that can be used to evaluate a company. I will base my analysis of Inditex, one of the major worldwide players in the retail and apparel industry, on two valuation methodologies: the Discounted Cash Flow (DCF) and the Multiples Method. The valuation resulted in a BUY recommendation, supported by a 117.62€ share price. In the end, a comparison with an Investment Bank report is made, allowing for the assumptions used to be tested. Although its recommendation is NEUTRAL, Citibank finds the firm undervalued and targets the price to 120€ per share.

Date of Award	2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa