Estimating The Fair Value Of City Chic Collective Limited (ASX:CCX)

City Chic Collective Limited (ASX:CCX) is a global retailer specializing in plus-size women's apparel, footwear, and accessories. With a market cap of AUD 54.60 million and an enterprise value of AUD 79.24 million, the company operates in Australia, New Zealand, the Americas, South Africa, and Europe. To estimate the fair value of CCX, we'll analyze its financial performance, valuation ratios, and other key metrics.

Financial Performance

In 2024, CCX's revenue was AUD 132.03 million, a decrease of -28.19% compared to the previous year's AUD 183.87 million. Losses were AUD -92.96 million, -6.83% less than in 2023. Despite the decrease in revenue, CCX's gross margin remained relatively stable at 46.81%.



Valuation Ratios

CCX's valuation ratios suggest that the stock may be undervalued compared to its peers and historical data. Some key ratios include:

* Price-to-Sales (P/S) ratio: 0.34, which is lower than the industry average.
* Price-to-Book (P/B) ratio: 1.42, also lower than the industry average.
* Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) ratio: 2.33, within the range of the industry average.

Key Financial Metrics

To further estimate CCX's fair value, consider the following key financial metrics:

1. Earnings Growth: CCX is forecast to grow its earnings by 94% and revenue by 6.2% per annum. This high growth rate suggests that the company has strong fundamentals and is likely to generate significant value for shareholders in the future.
2. Return on Equity (ROE): CCX's forecasted ROE is -3.5% in 3 years. A negative ROE indicates that the company is not generating profits for its shareholders, which is a red flag for investors.
3. Revenue Growth: CCX's revenue growth rate is relatively low compared to its earnings growth rate, which may suggest that the company is not effectively converting its sales into profits.

Analyst Price Targets and Revenue Estimates

Analysts' price targets and revenue estimates contribute to the fair value estimation of ASX:CCX by providing independent, expert opinions on the company's future performance. The average one-year price target for CCX is AUD 0.30, with a range of AUD 0.07 to AUD 0.63. These estimates can serve as a useful benchmark for comparing the stock's performance to its peers and the broader market.



Conclusion

Estimating the fair value of City Chic Collective Limited (ASX:CCX) involves analyzing the company's financial performance, valuation ratios, and other key metrics. While CCX's financial performance has been mixed, its valuation ratios suggest that the stock may be undervalued. Additionally, the company's high earnings and revenue growth rates indicate strong fundamentals. However, CCX's low or negative ROE is a red flag, indicating that it may not be generating sufficient profits to justify its current stock price. To determine the fair value of CCX, investors should consider these factors alongside other valuation metrics and company-specific data.