Is Now the Right Time to Reassess LVMH Amid Recent 17% Stock Slide?

If you’ve been tracking LVMH Moët Hennessy Louis Vuitton Société Européenne lately, you might have noticed its stock isn’t exactly following a straight line. With a recent close at €490.65, shares have seen a slight dip of 1.1% in the past week, but they’re still up 3.1% over the last month. While the past year has been more challenging, with the stock down 16.7% over twelve months and trailing 19.0% over three years, long-term investors have still enjoyed a 34.7% gain over the past five years. These numbers hint at a story of resilience and volatility, shaped in part by shifting investor perceptions about the luxury sector’s future in a changing global economy.

LVMH’s performance doesn’t exist in a vacuum. It has been influenced by broader market movements, including renewed interest in tangible, global brands and ongoing concerns over macroeconomic headwinds. Investors continue weighing the company’s sector leadership against risks, such as changing global demand patterns and currency fluctuations.

If you’re wondering whether these recent price swings mean it’s the right time to buy, sell, or hold, zooming in on valuation is essential. Our assessment gives LVMH a valuation score of 2 out of 6, meaning it appears undervalued in only two categories by traditional standards. But valuation is seldom straightforward, so let’s break down the numbers using several major approaches. And then, I’ll share an insight that just might be the best way to think about what LVMH is really worth today.

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) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s value. For LVMH Moët Hennessy Louis Vuitton Société Européenne, this means looking at how much cash the company is expected to generate over the next decade and what those future euros are worth right now.

LVMH’s latest reported Free Cash Flow stands at roughly €13.3 billion. Analysts forecast gradual growth, projecting Free Cash Flow to reach about €13.9 billion by 2029. For years beyond the initial five-year estimate, projections are extrapolated, indicating steady increases but with more uncertainty as the timeline extends. All of these substantial numbers are in euros, illustrating the company’s robust cash generation capacity.

Based on this approach, the estimated intrinsic value per share is €410.08. Given the current share price of €490.65, the analysis suggests the stock is about 19.6% overvalued compared to its calculated fundamental value. This implies that investors are paying a premium, perhaps for brand power, sector leadership, or optimism about future prospects, above what a strict cash flow calculation supports.

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 19.6%. 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 (PE)

For profitable companies like LVMH, the Price-to-Earnings (PE) ratio is a trusted yardstick for valuation. It shows how much investors are willing to pay for every euro of earnings and is especially relevant for mature businesses generating consistent profits, such as those in the luxury sector.

It's important to remember that the "right" PE ratio depends on more than profits alone. Investors also consider growth expectations and risk. Higher growth or lower risk tends to justify a loftier PE. Conversely, slower growth or higher risk drags the ratio down. While a single PE number tells us something, its real meaning comes from comparison.

LVMH currently trades at a PE ratio of 22.2x. For context, the luxury industry average stands at 18.8x, and LVMH's listed peers average 33.3x. However, these benchmarks overlook specific company factors. This is where Simply Wall St’s Fair Ratio comes in. This custom metric considers factors like LVMH’s expected earnings growth, profitability, industry position, and even its market size to set a more tailored benchmark. For LVMH, the Fair Ratio is 30.4x, which means the market is actually valuing the company at a discount to what you might expect for its profile.

This suggests shares are potentially undervalued compared to their fair multiple, indicating an opportunity for investors who trust the underlying fundamentals.

Result: UNDERVALUED

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 is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives are an easy, accessible tool that let you build and own your view of a company’s future by connecting its business story to your own financial forecast and a fair value estimate. Essentially, this means translating your perspective and assumptions about future revenue, earnings, and margins into an actionable number.

On Simply Wall St’s Community page, millions of investors use Narratives to see, share, and compare these perspectives, all linked directly to updated fair value calculations. Narratives help you decide if it’s time to buy or sell by making it simple to compare your forecasted fair value to today’s price. Because Narratives are updated dynamically as new earnings, news, or forecasts come in, your outlook always stays relevant.

For example, with LVMH Moët Hennessy Louis Vuitton Société Européenne, one Narrative forecasts a fair value of €434.6 (cautious about Asia-Pacific demand and margin pressures) while another sees €720.0 (optimistic about digital retail, efficiency, and luxury brand momentum), allowing you to find the Narrative that best fits your view of the company’s future.

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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