Is LVMH Fairly Priced After Steady Gains and Resilient Global Luxury Demand?

• If you are wondering whether LVMH Moët Hennessy Louis Vuitton Société Européenne is still a quality luxury name at a fair price, you are not alone. That is exactly what we are going to unpack here.
• The share price has been relatively steady but slightly positive, up around 1.2% over the last week and 3.6% over the past month, while sitting roughly flat year to date and modestly higher over 1 year. This hints at cautious optimism rather than a runaway rally.
• Recent headlines have focused on the resilience of global luxury demand amid a mixed macro backdrop, including continued strength in high end European and US consumers alongside a patchier recovery in China. At the same time, LVMH has been in the news for doubling down on flagship brands and high profile collaborations. These moves help explain why investors are still willing to pay up for its long term story.
• Despite the brand power, our valuation framework only gives LVMH a 2 out of 6 score for being undervalued. We will therefore break down what traditional valuation methods are saying about the stock, then finish with a more nuanced way of thinking about what LVMH is really worth.

LVMH Moët Hennessy - Louis Vuitton Société Européenne scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: LVMH Moët Hennessy - Louis Vuitton Société Européenne Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and discounting them back to today, to reflect risk and the time value of money.

For LVMH Moët Hennessy Louis Vuitton Société Européenne, the latest twelve month free cash flow is about €13.3 billion. Analysts provide explicit forecasts for the next few years, and beyond that Simply Wall St extrapolates cash flows based on more modest growth assumptions. Under this 2 Stage Free Cash Flow to Equity approach, free cash flow is projected to rise to around €17.3 billion in 10 years.

When all those future cash flows are discounted back, the intrinsic value comes out at roughly €448.76 per share. Compared with the current share price, this implies the stock is about 40.8% overvalued on a pure cash flow basis, suggesting investors are paying a premium for LVMH’s quality and brand strength.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests LVMH Moët Hennessy - Louis Vuitton Société Européenne may be overvalued by 40.8%. Discover 913 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for LVMH Moët Hennessy - Louis Vuitton Société Européenne.

Approach 2: LVMH Moët Hennessy Louis Vuitton Société Européenne Price vs Earnings

For profitable companies like LVMH Moët Hennessy Louis Vuitton Société Européenne, the price to earnings, or PE, ratio is a useful lens because it directly links what investors pay for each share to the profits the business is currently generating. In general, faster and more predictable earnings growth, combined with lower perceived risk, justifies a higher PE, while slower growth or higher uncertainty tends to pull a fair PE down.

LVMH currently trades on about 28.59x earnings, which is well above the broader Luxury industry average of roughly 17.42x but below the peer group average of around 37.76x. Simply Wall St also calculates a proprietary Fair Ratio for LVMH of about 31.09x. This is the PE level the stock might reasonably command given its earnings growth profile, margins, industry, size and specific risks.

This Fair Ratio provides a more tailored benchmark than simple peer or industry comparisons because it adjusts for company specific strengths and vulnerabilities rather than assuming one size fits all. Since LVMH’s actual PE of 28.59x sits below the 31.09x Fair Ratio, the shares appear modestly undervalued on this preferred multiple.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1463 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your LVMH Moët Hennessy - Louis Vuitton Société Européenne Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives.

A Narrative is simply your story about a company, turned into numbers such as future revenue, earnings and margins, and then into an estimate of fair value.

On Simply Wall St, Narratives live in the Community page and make this process accessible for everyone by linking a company’s story to a forecast and then to a fair value that you can compare with the current share price to inform a decision to buy, hold or sell.

Because Narratives are dynamic and update as new information arrives, such as news, earnings or analyst revisions, they can help you keep your view on LVMH current without rebuilding your analysis from scratch.

For example, one Narrative on LVMH might assume strong Asia Pacific recovery, rising margins and a fair value near €699, while a more cautious Narrative might include slower luxury demand, margin pressure and FX headwinds to arrive closer to €434.6. The platform lets you explore, compare and adapt these perspectives to your own view.

Do you think there's more to the story for LVMH Moët Hennessy - Louis Vuitton Société Européenne? 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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