The average target price of BIRK is 77 and suggests 56% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 81.4. This translates into 65% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 58.6. This suggests 19% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Birkenstock Holding plc manufactures and sells footwear products. It also offers sandals, shoes, closed-toe silhouettes, skincare products, and accessories. The company sells its products through e-commerce sites and a network of owned retail stores, as well as business-to-business channels. It operates in the United States, Brazil, Canada, Mexico, Europe, APMA, and internationally. Birkenstock Holding plc was founded in 1774 and is based in London, the United Kingdom. Birkenstock Holding plc is a subsidiary of BK LC Lux MidCo S.à r.l.

Birkenstock Holding plc

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

BIRK reported revenue of EUR 1 957mn in the last 12 months, up 8% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 32% from FY24 to EUR 1.35. Market expects EPS to reach EUR 1.23 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 14ppts and its growth decelerated by 9ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 29.7% in the last 12 months, up from 26.6% in FY23. 

Historically, BIRK has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 12.9%, a growth from 0.4% in FY23. 

Birkenstock Holding plc reported a return on equity (RoE) of 9.6% in the last 12 months, up from 0.2% in FY23. The market consensus projects an RoE of 0.2% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 5.2% in the last 12 months, an increase from 0.1% in FY23. The market analysts predict that RoA will be 0.1% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 5.6%, below the peers. The consensus estimate for FY24 for RoCE is 7.4%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.7 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

BIRK boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth and robust profitability, among the positive credit factors. Among the negative credit factors, we point to negligible return on capital, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, BIRK is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, BIRK is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

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Birkenstock Holding plc

$ 49.27

4

Birkenstock Holding plc

$ 49.27

4

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Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 49.27

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