H&M is the world's second-largest fashion retailer, with global scale, a large store base and a growing online/portfolio (COS, Arket, Weekday). Adjusted ROIC of 14% and +SEK 6.1B economic profit reflect a franchise mid-turnaround — refocusing on margins (toward a ~10% EBIT target), supply chain, pricing and portfolio brands after years of margin erosion.
The equity at SEK 164 embeds ~5.3% perpetual growth (reverse-DCF). The thesis is margin recovery plus a high dividend, against intense competition from Shein (ultra-fast/low-cost), Zara/Inditex (the quality leader) and a soft European consumer.
Bridging adjusted NOPAT through net cash/modest debt, reverse-DCF fair value runs SEK 90–125 across scenarios — below the SEK 164 price (~5.3% implied growth), i.e. the market prices the margin recovery delivering. The dividend supports total return while it plays out.
Base SEK 165 (flat); bull SEK 210 (the ~10% EBIT margin target is reached, dividend grows); bear SEK 120 (Shein/Zara competition and a weak consumer stall the recovery).
At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~13.4%, limited by ROIC 14% ≈ WACC 8%) it cannot reach the current EV. No-growth value is SEK 90/share (54% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 210 | ≥13% | +26% | 30% | ~10% EBIT margin target reached; dividend grows |
| Base | SEK 165 | ≥13% | -1% | 45% | Margin-recovery story; full valuation |
| Bear | SEK 120 | +9% | -28% | 25% | Shein/Zara competition + weak consumer stall it |
| Prob-weighted | SEK 167 | — | +0% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 135 | 151 | 163 | 182 | 195 | 232 |
| 7.25% | 109 | 122 | 130 | 144 | 154 | 181 |
| 8.00% (base) | 90 | 100 | 107 | 117 | 125 | 144 |
| 8.75% | 76 | 83 | 88 | 97 | 102 | 117 |
| 9.50% | 64 | 70 | 74 | 81 | 85 | 95 |
Green = fair value above the current price of SEK 167.10. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
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A refocus toward a ~10% EBIT margin is the core re-rating lever — the bull case.
Scale plus COS/Arket/Weekday support pricing and mix.
Better sourcing and inventory control lift margins.
A high dividend underpins total return during the turnaround.
A large online business plus store optimisation.
H&M is a global fashion turnaround — margin recovery plus a high dividend — at a full price against intense competition. HOLD, medium conviction; base target SEK 165 (flat).
Hitting the ~10% EBIT margin target is the upside; Shein/Zara competition and a weak consumer are the principal risks.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
NOPAT adjustments: Not available from structured data
Company add-backs we reject: Not available without footnote extraction
Pages read — FY: — · Q: —
How the mttssn view has evolved — each prior dated note is preserved.