Is There an Opportunity in Christian Dior After Recent Luxury Sector Slowdown?

Deciding what to do with Christian Dior stock right now might feel a bit like watching style trends move down the runway—shifting, sometimes unexpected, but always with a story behind the scenes. If you have been tracking the stock’s journey, you probably noticed its recent momentum, with a 2.5% gain over the past week and an impressive 7.4% jump in the last month. Despite that, the year-to-date return sits at -15.6%, and over the past twelve months the stock is down 18.1%. Still, stepping back a bit, the five-year return is a robust 43.4%, hinting at Dior’s enduring luxury appeal and long-term potential even as markets cycle through phases of risk and reward.

These ups and downs have been shaped by a mix of global industry factors, investor sentiment, and broader market movements, rather than any recent headline-grabbing news. Markets have lately re-evaluated luxury sector stocks, leading to tighter risk perception. This shift is reflected in Dior’s current price swings.

With valuation always top of mind for savvy investors, let’s dig into the numbers. Christian Dior passes 4 out of 6 major undervaluation checks, earning a value score of 4. But what do those checks actually mean, and how should they guide your next move? In the next section, we will break down each valuation approach, and by the end, I will share a perspective that could give you an even deeper understanding of what the stock is really worth.

Why Christian Dior is lagging behind its peers

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

The Discounted Cash Flow (DCF) model is a common approach for estimating what a company is really worth by forecasting its future cash flows and then discounting those values back to their present worth. In essence, it is a way of figuring out what future profits are worth in today’s money.

For Christian Dior, the DCF used here is a two-stage Free Cash Flow to Equity model. The company's current last twelve months’ Free Cash Flow is €13.51 billion. Over the next several years, projections estimate moderate growth, with annual Free Cash Flow expected to increase to approximately €17.67 billion by 2035. These future numbers combine a blend of analyst estimates for the first five years along with reasonable extrapolations for the years that follow.

Based on these projections, the estimated intrinsic value of Christian Dior is €1,140 per share. Compared to its recent market price, this suggests the stock is currently trading at a 55.5% discount to its fair value.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Christian Dior is undervalued by 55.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Christian Dior Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to metric for evaluating established, profitable companies like Christian Dior. Because Dior generates consistent profits, the PE ratio offers a clear snapshot of how the market values its earnings power. This is often a reliable starting point for investors seeking companies with strong underlying fundamentals.

Interpreting a company’s PE ratio involves more than just plugging in numbers. In general, higher expected growth or lower risk warrants a higher PE, while industries facing slower growth or greater uncertainty are typically assigned lower multiples. With Christian Dior currently trading at a PE ratio of 20.1x, investors are pricing in moderate growth and steady earnings. This compares to the industry average of 18.7x and a broader peer group average of 37.1x.

Simply Wall St’s “Fair Ratio” is designed to provide a more tailored benchmark than simple peer or industry comparisons. This proprietary metric incorporates Dior’s specific growth outlook, industry nuances, profit margins, company size, and risk factors. By accounting for all these moving parts, the Fair Ratio aims to capture what would be a reasonable multiple for Dior, instead of just relying on averages that may not reflect the company’s actual prospects.

Right now, Dior’s current PE is very close to this individualized Fair Ratio, suggesting the stock is trading at roughly its fair value and is neither notably expensive nor a bargain based on earnings alone.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 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 behind a company, connecting your personal perspective with your own assumptions about future sales, profits, and fair value. Narratives link a company’s journey, explaining why it wins or loses, to a financial forecast and ultimately to an estimated fair price. This lets you visualize how your outlook leads to specific investment decisions.

On Simply Wall St’s Community page, Narratives are an easy, accessible tool for building and sharing these stories, used by millions of investors to guide when to buy or sell. They help you compare your Fair Value against the current Price, and are kept up-to-date as fresh news or earnings change the outlook. For instance, some investors may see Dior’s wide global reach and brand power justifying a higher fair value, while others factor in slowing luxury demand and arrive at a much lower one. Narratives make it simple to understand your view, compare it, and act on what you believe.

Do you think there's more to the story for Christian Dior? Create your own Narrative to let the Community know!

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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