LPP (WSE:LPP) - Share price, News & Analysis

Q: What is the Fair Price of LPP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

LPP (PLN9380) is trading below our estimate of [[fair value]] (PLN10141.1)

LPP fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	5/6
Past Performance	5/6
Financial Health	5/6
Dividends	3/6

LPP Stock Overview

LPP SA designs, manufactures, distributes, and retails clothing for women, men, and children.

Rewards

Trading at 7.5% below our estimate of its fair value

Earnings are forecast to grow 21.52% per year

Earnings grew by 520.4% over the past year

Risk Analysis

Large one-off items impacting financial results

Shareholders have been diluted in the past year

LPP Competitors

VRG

WSE:VRG

zł867.5m

CDRL

WSE:CDL

zł108.2m

Monnari Trade

WSE:MON

zł100.7m

ESOTIQ & Henderson

WSE:EAH

zł62.9m

Price History & Performance

Summary of all time highs, changes and price drops for LPP
Historical stock prices
Current Share Price	zł9,380.00
52 Week High	zł19,040.00
52 Week Low	zł7,450.00
Beta	1.45
1 Month Change	-4.68%
3 Month Change	-4.77%
1 Year Change	-33.05%
3 Year Change	35.06%
5 Year Change	22.62%
Change since IPO	19,857.45%

Shareholder Returns

	LPP	PL Luxury	PL Market
7D	5.3%	2.3%	2.2%
1Y	-33.0%	-37.5%	-21.7%

Return vs Industry: LPP exceeded the Polish Luxury industry which returned -37.5% over the past year.

Return vs Market: LPP underperformed the Polish Market which returned -21.7% over the past year.

Price Volatility

Is LPP's price volatile compared to industry and market?
LPP volatility
LPP Average Weekly Movement	6.5%
Luxury Industry Average Movement	7.2%
Market Average Movement	6.5%
10% most volatile stocks in PL Market	12.0%
10% least volatile stocks in PL Market	4.2%

Stable Share Price: LPP is not significantly more volatile than the rest of Polish stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: LPP's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1989	32,000	Marek Piechocki	https://www.lppsa.com

LPP SA designs, manufactures, distributes, and retails clothing for women, men, and children. It offers apparel, accessories, and footwear under the Reserved, Cropp, House, Mohito, and Sinsay brands. The company sells its products through 2,244 stores, as well as through online stores in Poland and internationally.

LPP Fundamentals Summary

How do LPP's earnings and revenue compare to its market cap?
LPP fundamental statistics
Market Cap	zł20.68b
Earnings (TTM)	zł1.20b
Revenue (TTM)	zł15.25b

17.2x

P/E Ratio

1.4x

P/S Ratio

Is LPP overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LPP income statement (TTM)
Revenue	zł15.25b
Cost of Revenue	zł6.51b
Gross Profit	zł8.73b
Other Expenses	zł7.53b
Earnings	zł1.20b

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Oct 05, 2022

Earnings per share (EPS)	544.38
Gross Margin	57.28%
Net Profit Margin	7.87%
Debt/Equity Ratio	30.8%

How did LPP perform over the long term?

See historical performance and comparison

Dividends

1.9%

Current Dividend Yield

27%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is LPP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LPP?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for LPP. This is calculated by dividing LPP's market cap by their current preferred multiple.
What is LPP's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	zł20.68b

LPP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.6x
Enterprise Value/EBITDA	8.7x
PEG Ratio	0.8x

Price to Earnings Ratio vs Peers

How does LPP's PE Ratio compare to its peers?

LPP PE Ratio vs Peers

The above table shows the PE ratio for LPP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	5.6x
VRG VRG	10.6x	6.5%	zł867.5m
CDL CDRL	4.1x	n/a	zł108.2m
MON Monnari Trade	3.9x	n/a	zł100.7m
EAH ESOTIQ & Henderson	3.7x	n/a	zł62.9m
LPP LPP	17.2x	21.5%	zł20.7b

Price-To-Earnings vs Peers: LPP is expensive based on its Price-To-Earnings Ratio (17.2x) compared to the peer average (5.6x).

Price to Earnings Ratio vs Industry

How does LPP's PE Ratio compare vs other companies in the European Luxury Industry?

Price-To-Earnings vs Industry: LPP is expensive based on its Price-To-Earnings Ratio (17.2x) compared to the Polish Luxury industry average (8.3x)

Price to Earnings Ratio vs Fair Ratio

What is LPP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LPP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.2x
Fair PE Ratio	21.7x

Price-To-Earnings vs Fair Ratio: LPP is good value based on its Price-To-Earnings Ratio (17.2x) compared to the estimated Fair Price-To-Earnings Ratio (21.7x).

Share Price vs Fair Value

What is the Fair Price of LPP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LPP (PLN9380) is trading below our estimate of fair value (PLN10141.1)

Significantly Below Fair Value: LPP is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is LPP forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

21.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LPP's forecast earnings growth (21.5% per year) is above the savings rate (2.6%).

Earnings vs Market: LPP's earnings (21.5% per year) are forecast to grow faster than the Polish market (7.4% per year).

High Growth Earnings: LPP's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LPP's revenue (17.8% per year) is forecast to grow faster than the Polish market (5.3% per year).

High Growth Revenue: LPP's revenue (17.8% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: LPP's Return on Equity is forecast to be high in 3 years time (31.7%)

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Past Performance

How has LPP performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

21.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LPP has a large one-off loss of PLN415.8M impacting its April 30 2022 financial results.

Growing Profit Margin: LPP's current net profit margins (7.9%) are higher than last year (2.3%).

Past Earnings Growth Analysis

Earnings Trend: LPP's earnings have grown significantly by 21% per year over the past 5 years.

Accelerating Growth: LPP's earnings growth over the past year (520.4%) exceeds its 5-year average (21% per year).

Earnings vs Industry: LPP earnings growth over the past year (520.4%) exceeded the Luxury industry 78%.

Return on Equity

High ROE: LPP's Return on Equity (33.1%) is considered high.

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Financial Health

How is LPP's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LPP's short term assets (PLN9.8B) exceed its short term liabilities (PLN8.9B).

Long Term Liabilities: LPP's short term assets (PLN9.8B) exceed its long term liabilities (PLN3.1B).

Debt to Equity History and Analysis

Debt Level: LPP has more cash than its total debt.

Reducing Debt: LPP's debt to equity ratio has increased from 27.5% to 30.8% over the past 5 years.

Debt Coverage: LPP's debt is well covered by operating cash flow (215.8%).

Interest Coverage: LPP's interest payments on its debt are well covered by EBIT (12.5x coverage).

Balance Sheet

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Dividend

What is LPP current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.87%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LPP's dividend (1.87%) isn’t notable compared to the bottom 25% of dividend payers in the Polish market (2.73%).

High Dividend: LPP's dividend (1.87%) is low compared to the top 25% of dividend payers in the Polish market (8.75%).

Stability and Growth of Payments

Stable Dividend: LPP's dividend payments have been volatile in the past 10 years.

Growing Dividend: LPP's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (26.8%), LPP's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (38.5%), LPP's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

10.2yrs

Average management tenure

CEO

Marek Piechocki (61 yo)

no data

Tenure

zł8,345,000

Compensation

Mr. Marek Piechocki is a Co-Founder of LPP SA and serves as its Chief Executive Officer and President of Management Board. Mr. Piechocki is responsible for all the aspects of the operations of LPP Spolka A...

CEO Compensation Analysis

Compensation vs Market: Marek's total compensation ($USD1.83M) is above average for companies of similar size in the Polish market ($USD574.18K).

Compensation vs Earnings: Marek's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: LPP's management team is seasoned and experienced (10.2 years average tenure).

Board Members

Experienced Board: LPP's board of directors are considered experienced (4.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 19%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/12 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/04/30
Annual Earnings	2022/01/31