H & M Hennes & Mauritz (OM:HM B) Faces RBC Earnings Cuts, Is The Valuation Too Rich?
RBC Capital Markets has cut earnings forecasts for H & M Hennes & Mauritz (OM:HM B) for the 2026 and 2027 financial years, highlighting softer German consumer demand and higher operating costs as key concerns for investors.
See our latest analysis for H & M Hennes & Mauritz.
H & M Hennes & Mauritz shares trade at SEK184.5, with a 30 day share price return of 12.43% and a 90 day share price return of 11.51%, while the 1 year total shareholder return of 35.26% suggests momentum has been building despite a slightly negative year to date share price return.
If H & M Hennes & Mauritz has you rethinking where growth could come from next, it may be worth sizing up 115 top founder-led companies.
Bulls point to H & M Hennes & Mauritz’s strong recent shareholder returns, while bears highlight softer German demand and rising costs. Do the current valuation markers back the optimism or echo RBC’s caution?
Most Popular Narrative: 18.8% Overvalued
The most followed H & M Hennes & Mauritz narrative puts fair value at SEK155.32, which sits well below the latest SEK184.5 close, and frames a story built around margin discipline rather than rapid expansion.
H&M's strategic focus on organic growth through an elevated pricing strategy, improved shopping experiences, and strengthening of brand positioning, particularly in womenswear and online platforms, indicates potential future increases in revenue.
The company's plan to optimize its store portfolio by net closing stores and upgrading a significant share of the store portfolio with improved layouts and tech functionalities in 2025 suggests potential enhancement in net margins through cost savings and increased sales per store.
It is worth examining what kind of revenue glide path and margin lift are incorporated into that fair value. The narrative leans heavily on measured growth, higher profitability and a lower future earnings multiple. The full story explains how those elements combine into today’s valuation gap.
Result: Fair Value of SEK155.32 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, H & M Hennes & Mauritz still faces risk from weaker sales in key regions and higher purchasing and inventory costs, which could pressure margins and cash generation.
Find out about the key risks to this H & M Hennes & Mauritz narrative.
Another View On H & M Hennes & Mauritz
The most followed narrative points to H & M Hennes & Mauritz being 18.8% overvalued relative to a SEK155.32 fair value. Our DCF model tells a very different story. On this view, the shares trade at SEK184.5 compared to an estimated future cash flow value of SEK367.45, which screens as undervalued. Which lens do you think better fits the risks and cash generation you expect?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out H & M Hennes & Mauritz for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 274 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With H & M Hennes & Mauritz pulled between concerns and optimism, this is a good moment to move quickly and test the story against the numbers yourself. To weigh those trade offs in one place, take a closer look at the 3 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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