Christian Dior (ENXTPA:CDI): Assessing Valuation as Momentum Builds Over the Past Month

Christian Dior (ENXTPA:CDI) shares have seen steady movement over the past month, delivering a 5% gain and continuing an upward trend that has been present throughout the past 3 months. Investors are watching for the next catalyst in this luxury stock’s trajectory.

See our latest analysis for Christian Dior.

Momentum in Christian Dior’s share price seems to be building again, with a notable 5% gain over the last month. This continues to offset what has otherwise been a muted year in terms of total shareholder return. Recent price action suggests renewed optimism, even as the longer-term five-year total shareholder return comfortably outpaces short-term moves.

If you’re looking to broaden your search beyond luxury, now could be the right moment to discover fast growing stocks with high insider ownership

The key question for investors now is whether Christian Dior’s current valuation leaves room for upside or if the market has already factored in all expectations for future growth. This raises the prospect of a timely buying opportunity or not.

Price-to-Earnings of 20.7x: Is it justified?

Christian Dior is currently trading at a price-to-earnings (P/E) ratio of 20.7x. This places it above the European luxury sector average, but below its close peer group. With a last close at €524 per share, investors are paying a premium for current and expected future earnings.

The P/E ratio is a key metric for evaluating whether the market is pricing in strong future profitability. For established luxury brands like Christian Dior, a higher multiple often signals that investors expect durable earnings and perhaps superior brand power.

Compared to peers, Dior is less expensive, with its P/E ratio of 20.7x sitting comfortably below the group's 37.9x average. However, it is slightly more expensive than the wider luxury industry, which averages 19.5x. This suggests some optimism built into Dior's share price. While insufficient data is available for a fair ratio comparison, current pricing may reflect investor confidence in the company's longevity and profitability.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 20.7x (ABOUT RIGHT)

However, ongoing weak yearly returns and limited transparency around future earnings growth could present challenges to the positive outlook for Christian Dior’s valuation.

Find out about the key risks to this Christian Dior narrative.

Another View: Discounted Cash Flow Perspective

Taking a look through the lens of our DCF model, Christian Dior appears significantly undervalued. The SWS DCF model places fair value at €1,138.84 per share, which is more than double the recent market price. Does this sizable discount suggest an overlooked opportunity, or is the market signaling caution for a reason?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Christian Dior for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Christian Dior Narrative

Keep in mind that if you see the story differently or prefer to reach your own conclusions, you can craft a personal view in just a few minutes. Do it your way

A great starting point for your Christian Dior research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Don’t let opportunities pass you by when there are so many other compelling stocks catching attention right now. Set yourself up for smarter investing with these three fresh ways to expand your research today:

• Boost your portfolio’s growth potential by investigating these 899 undervalued stocks based on cash flows that currently trade below intrinsic value based on forward cash flows and analyst expectations.
• Strengthen your passive income strategy by checking out these 19 dividend stocks with yields > 3% consistently delivering impressive yields and reliable payouts beyond the market average.
• Step ahead in the tech revolution by uncovering these 24 AI penny stocks positioned at the cutting edge of artificial intelligence and automation breakthroughs.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com