resulmuslu/iStock Editorial via Getty Images Since the last time I wrote about the luxury fashion stock Prada ( OTCPK:PRDSF ) ( OTCPK:PRDSY ) in November last year, its price is up by 35% and the total returns are even bigger at 37%. This is an impressive increase, and in stark contrast with my Sell rating on it at the time, which was based on slowing down in its sales growth, compounded with the likelihood of a slowdown in the luxury sector and its elevated market multiples compared with peers. Rise in luxury stocks and company level developments Until early January, this appeared to be investor thinking as well, as the stock was down by almost 10% from November.
However, a pickup in the luxury stocks after that was also beneficial for Prada (see chart below). Company specific developments have further reinforced its price uptick, setting Prada apart from its peers. Here are three financial developments that stand out for the company now.
Price Returns, Top 5 Luxury Stocks (By Market Capitalisation) (Source: Seeking Alpha) #1. Robust revenue growth When I last checked, numbers were available up to the first nine months of the year (9m 2023). While the net revenue growth for the period wasn't the worst at 12.
4% year-on-year (YoY) in reported terms, the number had dramatically slowed down to 3.4% in the third quarter (Q3 2023) on weakness across its key markets. The US was a particular downer, with a continued contraction in sales.
However, the risk of an extended drag didn’.