LVMH Stock Unfavorable in Inflationary Conditions
A Modern Empire of Luxury: LVMH
Swish through a sea of opulence with LVMH, the kingpin of luxury goods, unfazed by inflation and economic crises. With 75 illustrious brands under its umbrella and 5,000 stores worldwide, the conglomerate is a glittering beacon in an uncertain world.
Its ceaselessly charismatic CEO, Bernard Arnault, a titan of industry with a net worth of $150.7 billion according to Forbes, steers LVMH's resplendent course. Inflation might be running rampant, but LVMH holds the aces— with unique pricing power, a robust financial foundation, and commanding the luxury market.
While inflation grips the economy like a vice and central banks ratchet up interest rates, LVMH keep their cool. Consumers clamor for a Louis Vuitton bag, unbothered by whether it costs €2,000 or €3,000. LVMH's recent financials showcase its strength, having grown double-digits across all business sectors year-on-year.
The U.S. inflation rate hit an eye-watering 8.2%, even towering over 10% in Germany at one point. Yet, LVMH remains the picture of financial health. The conglomerate's sales surged 28% to €56.5 billion in the first nine months of the year, with fashion and leather goods taking the lead, shrugging off any signs of stress.
Invest or Abstain?
For the full fiscal year, LVMH anticipates continued growth. Analysts predict LVMH will post over 20% growth in both revenue and earnings per share. Despite a 17% bump since June and a 14% dip since the start of the year, the stock still has room to climb. The market, however, tells a different story. LVMH's stock has dipped recently, falling 0.286% on April 30 and dissenting from the 17% growth touted above.
Investors seeking a cornerstone for their portfolios might find solace in LVMH's resilience during economic downturns. LVMH's historical performance speaks for itself, bouncing back swiftly from the financial crisis and remaining profitable during the COVID pandemic. The stock currently trades at around 20 times its anticipated earnings for the current fiscal year, well below its historical average of around 24.
Another factor to consider is the recent price target cut by Bernstein, dropping from €800 to €625, despite maintaining an Outperform rating. After all, even the mighty LVMH isn't immune to market forces.
If you view the glass half full, the revised Bernstein target implies a ~28% upside potential from the current price. But proceed with caution, as short-term volatility could turn the glass half empty, at least for now.
As for the next earnings report, mark your calendar for July 21, 2025. Hang tight for those numbers—they could be a deciding factor in whether LVMH is the luxurious addition to your investment portfolio.
- LVMH, the richest conglomerate in the luxury goods industry, boasts a robust financial foundation and commanding market presence, despite inflation and economic crises.
- In the business sphere, LVMH, known for brands like Louis Vuitton, holds unique pricing power, allowing consumers to clamor for its products regardless of rising costs.
- Financially, LVMH continues to thrive with double-digit growth across all sectors, as exemplified by its 28% surge in sales during the first nine months of the year.
- For investors contemplating investing in LVMH stock, analysts predict over 20% growth in both revenue and earnings per share for the full fiscal year, despite recent market fluctuations and a revised price target cut by Bernstein.
