Industria de Diseño Textil, or Inditex, reported an 8.4% increase in revenue in the third quarter, with sales growing 10.6% in the fourth quarter. Their gross margin increased by 30 basis points and EBIT margin by 40 points, reaching 21.1%. Inventory growth slightly outpaced sales, but is considered high quality.

Due to their strong performance, Morningstar increased Inditex’s fair value estimate to EUR 41.50 from EUR 38.40. The company has shown the ability to gain market share while increasing profitability, with an operating margin of 19.5% and high-single-digit revenue growth expected to continue. Future efficiency gains may be passed on to consumers.

Read more at Morningstar: Inditex Earnings: Accelerating Sales Trends; Shares Remain Expensive