The Royal Mail share price started the week on a positive note. At the time of writing, the lead postal company in the United Kingdom was trading 0.50% higher at 495.7p. Its total market capitalization currently stands at £4.96 billion.
RMG’s Fundamental Analysis
Just like its main competitors, DHL and XPO Logistics, Roya Mail Group has been struggling to recover from the pandemic. The resurgence of the coronavirus infections underpinned by the Delta variant saw the volume of letters sent decline.
However, the pandemic was still a good thing for the company, as many people turned to online shopping. The company’s shares have jumped more than 300% from their lowest point in 2020. Today’s shares are trading more than 40% higher from their lowest point in 2021, making it one of the top-performing stocks in the FTSE 100 index.
Royal Mail is in a highly competitive and low-margin business. The company recorded an operating profit margin of 5.6% last year. The group revenue grew by 12.5% in the first quarter of 2021 compared to the previous year.
Most analysts seem uncertain about the Royal Mail share price. With the ongoing slim operating margins, the company remains at risk.
RMG’s Technical Outlook
For the past month, the Royal Mail share price has been on several twists and turns. The RMG share price hit an intraday high of 499.5p before pulling back.
On the four-hour chart, the stock is trading along with the 25-day exponential moving average. It is trading below the 50 and 200-day moving average. Its Relative Strength Index (RSI) has been struggling to move upwards. However, at 46, its RSI is still weak.
Therefore, the Royal Mail share price is likely to face a major retracement before jumping back. However, a move below the support level at 480.6, will invalidate this view.