The average target price of RIPLEY.SN is 412 and suggests 11% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 460.0. This is lower than the current market price, meaning that even the most optimistic analyst does not see upside potential. On the other hand, the most pessimistic analyst has a target price of 350.0. This is equivalent to 24% downside potential in the worst case. 

Ripley Corp S.A. engages in the retail sale of apparel, accessories, and home products through department stores and e-commerce. It is also involved in banking business through the management of Ripley Bank that primarily focuses on the consumer sector; and the real estate business, including the ownership of shopping malls. The company operates 76 stores in Chile and Peru; 13 malls; and approximately 1.5 million credit cards with debt. Ripley Corp S.A. was founded in 1956 and is based in Santiago, Chile.

Chile

Ripley Corp S.A.

Consumer Cyclical

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

RIPLEY.SN reported revenue of CLP 2 086 829mn in the last 12 months, up 8% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach CLP 17.00 in FY25.

The stock has been growing steadily in the past six months, adding 57% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 61ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 21ppts over the past six months and grew 9ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.4% in the last 12 months, up from 1.1% in FY23. 

Historically, RIPLEY.SN has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.6%, a growth from -2.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 2.6%, below the peers. The consensus estimate for FY24 for RoCE is 1.1%, again behind the peers. 

Ripley Corp S.A. reported a return on equity (RoE) of 5.4% in the last 12 months, up from -5.2% in FY23. The market consensus projects an RoE of 2.1% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.4% in the last 12 months, an increase from -1.3% in FY23. The market analysts predict that RoA will be 0.5% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

RIPLEY.SN has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, weak debt servicing capacity, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, RIPLEY.SN is as volatile as an index. In other words, the stock will move with 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 limited. 

In normal market circumstances, RIPLEY.SN is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. 

Based on key historical and expected multiples, the stock is slightly undervalued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Ripley Corp S.A.

CLP 446

4

Ripley Corp S.A.

CLP 446

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CLP 446

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