LVMH (LVMUY)
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.
