How is LVMH valued?


Priced at a Fair Value With Acceptable Growth Fundamentals

During the last year, LVMH returned a positive performance of 10.8%, with a high of $174.74 and a low of $112.04. Over the same period, the stock outpaced the S&P 500 index by 20.8%. The company's 50-day average price was $150.83 per share as of January 2023. LVMH Moët Hennessy - Louis Vuitton, Société Européenne operates as a luxury goods company worldwide. Based in Paris, France, the Consumer Cyclical company has 157,953 full time employees. LVMH has offered a 7.1% dividend yield over the last 12 months.

Growing Revenues With a Flat Capital Expenditure Trend:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $53,670 $44,650 $64,215
Revenue Growth n/a -16.81% 43.82%
Gross Margins 66.2% 64.4% 68.3%
Gross Margins Growth n/a -2.72% 6.06%
Operating Margins 21.2% 18.6% 26.7%
Operating Margins Growth n/a -12.26% 43.55%
Earnings Per Share $2.85 $1.86 $4.78
EPS Growth n/a -34.74% 156.99%
Free Cash Flow (MM) $8,259 $8,433 $15,392
FCF Growth n/a 2.11% 82.52%
Capital Expenditures (MM) -$3,388 -$2,465 -$3,255
Net Debt / EBITDA 0.56 0.48 0.64

LVMH Has Elevated P/B and P/E Ratios:

LVMH has a trailing twelve month P/E ratio of 29.8 compared to the Consumer Cyclical sector's average of 24.11.

The average annual growth rate of the company's last 3 years of reported earnings per share is 61.0% (the company doesn't issue forward EPS guidance). On this basis, the company's PEG ratio is 0.49. We prefer to use a more conservative estimate of the company's earnings growth potential, which is the broader market expected 13.05% earnings growths. Employing this alternate rate, we obtain a PEG ratio of 2.28, which suggests that LVMH is overpriced in terms of earnings growth.

LVMH is overpriced compared to its book value, since its P/B ratio of 8.4 is higher than the sector average of 3.11. The company's shares are currently 348.4% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.

LVMH's inflated valuation in terms of earnings and book value is balanced by a strong record of cash flows and a balance sheet that shows sustainable levels of debt.

Most of the Market Indicators on LVMH Are Negative:

Only one analyst covers LVMH. They have given the company a rating of strong buy along with a target price of $210, which is -19.04% away from its current price.

Overall, the company's top shareholder is Fisher Asset Management, LLC, whose stake in the company is worth around $1,671,943,058.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.