Is Christian Dior’s Share Price a Bargain After Recent 3.4% Dip?

• Curious whether Christian Dior's current share price reflects its true worth? You're not alone. Getting the real story means going beyond the basics.
• In the past year, the stock has delivered a steady 8.7% return. However, it recently dipped by 3.4% over the last week and is down 4.5% year-to-date, signaling shifting market sentiment.
• This movement comes as investors digest updates around the luxury sector's global demand. Significant headlines highlight both resilience in European markets and challenges in Asia. Christian Dior's branding power and recent collaborations have kept it in the spotlight, adding fuel to debates about its future momentum.
• Our current valuation assessment gives Christian Dior a 3 out of 6 score for being undervalued, based on widely-used financial checks. We'll break down how analysts arrive at these numbers. Stick around for a smarter, more holistic way to think about Dior's real value.

Find out why Christian Dior's 8.7% return over the last year is lagging behind its peers.

Approach 1: Christian Dior Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by forecasting its future cash flows and then discounting them back to their present value. For Christian Dior, this means projecting how much cash it is expected to generate over time and assessing what that stream of income is worth today in euros.

Currently, Christian Dior generates Free Cash Flow of €13.5 billion. Analysts estimate annual growth, with FCF expected to rise gradually each year. Projections for 2026 place it at €14.1 billion, with continued increases up to around €17.9 billion in 2035. It is important to note that while forecasts up to five years are based on analyst estimates, projections beyond that are extrapolated based on recent trends.

Using this cash flow outlook, the DCF model calculates an intrinsic value of €1,169.82 per share. This suggests that the stock is significantly undervalued, as the intrinsic discount implies it trades at about 51% below what the DCF analysis estimates it is actually worth.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Christian Dior is undervalued by 50.9%. Track this in your watchlist or portfolio, or discover 904 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Christian Dior.

Approach 2: Christian Dior Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a widely used measure to value profitable companies like Christian Dior. Because Dior generates solid and consistent earnings, the PE ratio provides a useful snapshot of how the market values its profits compared to industry norms and peers.

Growth expectations and risk play a big role in what constitutes a “normal” or “fair” PE ratio. Typically, faster-growing or less risky companies deserve a higher PE, while those with slower growth or more volatility justify a lower multiple. This means context matters when interpreting Dior’s ratio.

Currently, Christian Dior trades at a PE of 22.7x. This stands above the luxury industry average PE of 17.5x, but below the peer group average of 38.8x. At first glance, this suggests Dior commands a premium over the typical luxury company, but is still more modestly valued than the biggest peers.

Simply Wall St’s proprietary “Fair Ratio” takes an additional step in assessing valuation. Instead of a simple comparison, it leverages Dior’s specific earnings growth, profit margin, size, risk profile, and broader industry factors. This provides a more tailored benchmark of what a justified PE should be for Dior, beyond generic averages.

Comparing the Fair Ratio to the current PE, the difference is well within a reasonable margin, signaling that the market price is in line with what Dior fundamentally deserves.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1416 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Christian Dior Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about a company; it is your own perspective or thesis on where the business is headed, backed up by your personal assumptions for fair value, future revenue growth, earnings, and margins. Narratives connect the dots between what you believe about Christian Dior’s future, the financial forecasts you build from those beliefs, and the fair value you calculate as a result.

On Simply Wall St’s platform, millions of investors use the Community page to access Narratives, making it easy for anyone to create, view, or update these story-driven forecasts. Narratives empower you to decide when to buy or sell by directly comparing the fair value from your forecast to today’s share price, and because they update dynamically with new news or earnings, your view stays relevant as the market shifts. For example, some investors see Dior's fair value as high as €1,350 per share based on aggressive growth expectations, while others forecast a value as low as €950 due to anticipated headwinds, so there is always room for your own point of view.

Do you think there's more to the story for Christian Dior? Head over to our Community to see what others are saying!

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.

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