Is Now the Right Moment to Reassess LVMH After the Recent 7% Share Price Rebound?

If you are weighing what to do with LVMH Moët Hennessy Louis Vuitton Société Européenne stock, you are not alone. Curious investors have seen the share price rebound by 7.3% in the last week and edge up 6.2% over the past month, prompting fresh questions about its growth prospects and how the market is pricing in the latest risks. Still, looking at the bigger picture, the year-to-date return stands at -13.0% and the one-year slide is -14.4%, with a three-year return of -5.3%. But zoom out farther and LVMH is still sitting on a 45.9% gain over five years, suggesting long-term brand strength, even as recent trends may be reflecting shifting investor sentiment or sector rotations in luxury goods.

With so many cross-currents, valuation has become a hot topic. If we run LVMH through six different undervaluation checks, the company scores a 2, indicating it is undervalued according to two of those approaches. Some might see that as an opportunity, while others may want deeper context. Next, we will break down each method to reveal what is driving that score, and stay tuned, because we will talk about a smarter way to think about valuation at the end.

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

The Discounted Cash Flow (DCF) method estimates a company’s intrinsic value by projecting its future cash flows and then discounting those amounts back to today’s value. This approach is widely regarded as an in-depth way to value businesses, especially those with reliably growing cash flows like LVMH.

At present, LVMH's Free Cash Flow stands at approximately €13.33 billion. Analyst forecasts provide estimates for the next five years, with further numbers extrapolated to cover a full decade. By 2029, the projected Free Cash Flow is €13.76 billion, with longer-term forecasts suggesting continued steady growth. All figures use the euro as the reporting currency to align with the company’s financial disclosures.

Applying these projections within the DCF model yields an estimated fair value of €402.75 per share. However, the current market price sits about 37.3% above this calculated intrinsic value, suggesting the stock is trading at a notable premium to its underlying cash flow fundamentals.

Result: OVERVALUED

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.

Our Discounted Cash Flow (DCF) analysis suggests LVMH Moët Hennessy - Louis Vuitton Société Européenne may be overvalued by 37.3%. Find undervalued stocks or create your own screener to find better value opportunities.

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

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like LVMH. It provides a quick snapshot of how much investors are willing to pay for each unit of earnings, making it especially useful when the company has a strong, consistent profit record.

Growth expectations and perceived risks play a major role in shaping what investors consider a "normal" or "fair" PE ratio. Higher growth prospects or lower risk typically justify a higher PE, while industries facing headwinds or companies with volatile earnings often command lower multiples.

LVMH is currently trading at a PE ratio of 25x. In comparison, the average PE among its global luxury peers is 36.9x, while the broader luxury industry averages 18.7x. This shows LVMH's valuation is somewhere in the middle, below peers but above the industry norm.

To get a clearer sense of value, we turn to the Simply Wall St "Fair Ratio," which offers a more personalized benchmark. This proprietary metric calculates what an appropriate PE should be, given factors such as earnings growth, profit margin, industry, size, and risk profile. Unlike simple peer or industry averages, the Fair Ratio builds a fuller picture by accounting for the qualities that make LVMH unique.

For LVMH, the Fair Ratio is estimated at 31.1x. That’s quite close to the current market PE of 25x, suggesting the share price accurately reflects the company’s prospects and risk profile, taking into account its strong brand and market leadership.

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 LVMH Moët Hennessy - Louis Vuitton Société Européenne Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, powerful tool that lets you put your own story behind LVMH’s numbers by combining your perspective on the company’s future, such as revenue, margins, and fair value estimates, with real data to create a forecast that reflects your views.

Narratives bridge the gap between what you believe about LVMH as a business and the hard financial numbers, helping you see how changes in the story, such as expansion in Asia-Pacific, new product launches, or industry headwinds, could affect its fair value compared to today’s share price. On Simply Wall St’s Community page, millions of investors tap into Narratives to decide whether to buy or sell, confident that any new news, results, or risks will update their fair value in real time based on their assumptions.

For example, one Narrative for LVMH uses optimistic revenue and margin forecasts to calculate a fair value of €720.00 per share, while another more cautious view assigns a fair value as low as €434.60. This flexibility means you can compare different perspectives and test how your own expectations stack up, making Narratives a smarter, personalized way to guide your investment decisions.

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