“The challenge for Inditex is to break to the upside the bearish trendline”

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Inditex continues to progress smoothly in soil the stock market after the significant fall recorded in mid-September of 2020, when it lost 26 euros by action. In addition, last week stressed the falls of the selective Spanish.

The growing containment measures in Spain and in Europe pass bill to your quote, so that the textile giant is still climbing again in the final stretch of the year. Currently, very close to the 21,55 euros per share.

In the current scenario of pandemic the textile galician redoubles its efforts to maintain its level of competitiveness in the sector. More specifically, Inditex still working on their process of digital transformation.

It is a commitment necessary for the evolution of the company to the par complex for its workers, since that would imply the relocation of a significant part of its staff. In particular, in Spain, the labour force sum to 28% of the group total.

With all of the foregoing, Inditex maintains its positive evaluation on the part of the houses of analysis as Aberdeen Standard Investments, that the qualifies as “competitive” in terms of balance sheet and business model.

At the level of fundamental, highlights the low level of debt assumed by the textile galician, reflected in its leverage ratio, which is encrypted in a 34,66%. The figures of return on equity or ROE (25%) and return on invested capital or ROIC (20,48%) provide some peace of mind for the investor long.

At the technical level, after the fall from the border of 26 euros (September 16, 2020), accentuated by two gaps bass players later (observed on 18 and 23 September, respectively by adding up to two sessions), the price has broken the side channel with the upper border at 24,515 euros. The challenge is to break to the upside the bearish trendlinein search of that border.

Continue the bullish momentum, the next resistance for Inditex is to be found in the 24,635 euros. In this strategy colocariamos a stop loss at the level of 19.90 euros per share.

***Álvaro Giménez-Cuenca is analyst XTB.