Marks and Spencer (LSE: MKS) shares have risen by round 20% during the last month, making the agency one of many prime performers within the FTSE 100 over this era.

The retailer’s shares have climbed by practically 60% during the last yr. On a five-year view, the M&S share price has risen by a formidable 350%.

On this piece I’m asking whether or not buyers ought to nonetheless contemplate shopping for M&S shares. Is there nonetheless extra to return from this spectacular turnaround?

Robust momentum

Just a few years in the past, Marks and Spencer appeared an unlikely alternative for an funding success story. Falling gross sales, dated inventory, and unprofitable shops have been holding again income.

Since CEO Stuart Machin took cost in Might 2022, a lot of this has modified. Annual gross sales have risen by 23% to £13.4bn, whereas working revenue is up by nearly 50% to £864m.

Machin has minimize debt, closed unprofitable shops, and led a revamp of the core Clothes, House & Magnificence enterprise. On the identical time, M&S Meals has continued to carve out a distinct segment as a preferred alternative for consumers in search of an inexpensive improve from the large supermarkets.

The corporate’s most up-to-date buying and selling replace coated the final 13 weeks of 2024 – together with the all-important Christmas interval. Complete group gross sales rose by 5.6% to £4.1bn.

Meals gross sales have been up by 8.7%, together with the “biggest day” ever.

In the meantime, the group’s Clothes, House & Magnificence division achieved its greatest ever week of on-line gross sales.

Is a slowdown doubtless?

I believe there are some good causes to take a extra cautious view on M&S shares. To start with, this enterprise isn’t as low cost because it was.

As I write, the shares are buying and selling on round 13 occasions 2025/26 forecast earnings. A yr in the past, Marks and Spencer’s forecast price-to-earnings ratio (P/E) was solely 10.

A P/E of 13 isn’t costly for all sorts of enterprise. However M&S is a big, mature retailer working in a sluggish UK economic system. Revenue margins are comparatively low.

Progress during the last couple of years has been boosted by operational enhancements. With many of those modifications now full, I’m not positive if latest progress charges will likely be sustainable. Slowing progress may put stress on the inventory’s valuation.

There’s additionally the danger that new issues may hit the enterprise. On 22 April, M&S revealed that its retailer operations had been hit by a latest cyberattack. In accordance with some press reviews, click on and accumulate companies have been disrupted.

The corporate hasn’t revealed any particulars in regards to the assault. However occasions reminiscent of this may be expensive and take time to resolve.

M&S shares: purchase or keep away from?

All investments carry some threat. However I believe there are some good causes to stay constructive about Marks & Spencer. This enterprise has an enormous footprint in UK retail and is working way more competitively than it was a couple of years in the past.

On-line progress can also be a constructive. Many patrons anticipate a seamless mix of in-store and on-line retail, and M&S is nicely positioned to offer this.

In the meantime, the M&S Meals enterprise may do nicely, even in a recession, as consumers purchase treats to eat at residence as an alternative of eating out.

Total, I believe M&S continues to be value contemplating as a potential funding.