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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @DimitryNakhla: A sober valuation analysis on $LVMH ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 19.97x
โข10-Year Mean: 23.92x
โขNTM FCF Yield: 4.87%
โข10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $LVMH is a high-quality business
*Financials In Euros โฌ*
BALANCE SHEETโ
โขCash & Short-Term Inv: โฌ11.09B
โขLong-Term Debt: โฌ11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.6%
โข2020: 10.2%
โข2021: 18.9%
โข2022: 21.2%
โข2023: 21.0%
โขLTM: 19.1%
RETURN ON EQUITYโ
โข2019: 21.5%
โข2020: 12.8%
โข2021: 28.9%
โข2022: 28.0%
โข2023: 26.7%
โขLTM: 22.8%
$LVMH has excellent return metrics, highlighting the companyโs financial efficiency
REVENUESโ
โข2013: โฌ29.02B
โข2023: โฌ86.15B
โขCAGR: 11.49%
FREE CASH FLOWโ
โข2013: โฌ2.99B
โข2023: โฌ11.59B
โขCAGR: 14.52%
NORMALIZED EPSโ
โข2013: โฌ6.83
โข2023: โฌ30.33
โขCAGR: 16.07%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 503.22M
โขLTM Shares Outstanding: 499.83M
MARGINSโ
โขLTM Gross Margins: 68.5%
โขLTM Operating Margins: 25.6%
โขLTM Net Income Margins: 16.3%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: โฌ30.12 (-0.7% YoY)* Dec
2025E: โฌ33.57 (11.4% YoY)
2026E: โฌ36.73 (9.4% YoY)
So, letโs assume $LVMH ends 2026 with โฌ36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: โฌ844.79๐ต โฆ ~14.1% CAGR
22x P/E: โฌ808.06๐ต โฆ ~12.1% CAGR
21x P/E: โฌ771.33๐ต โฆ ~10.0% CAGR
20x P/E: โฌ734.60๐ต โฆ ~8.0% CAGR
As you can see, weโd have to assume 22x for $LVMH to have attractive return potential & while 22x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
If we โnormalizeโ the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x ๐
While $LVMH deserves to trade at a premium multiple due to its quality, Iโm hesitant to rely on 23x because I want to ensure some margin of safety
Itโs safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at โฌ636๐ต $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to โฌ585๐ต)
$MC $LVMHF $LVMUY
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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RT @DimitryNakhla: A sober valuation analysis on $LVMH ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 19.97x
โข10-Year Mean: 23.92x
โขNTM FCF Yield: 4.87%
โข10-Year Mean: 4.13%
As you can see, $LVMH appears to be trading below fair value
Going forward, investors can receive ~19% MORE in earnings per share & ~13% MORE in FCF per share ๐ง ***
Before we get into valuation, letโs take a look at why $LVMH is a high-quality business
*Financials In Euros โฌ*
BALANCE SHEETโ
โขCash & Short-Term Inv: โฌ11.09B
โขLong-Term Debt: โฌ11.64B
$LVMH has a strong balance sheet, reflected by its AA- S&P Credit Rating & 16x FFO Interest Coverage
RETURN ON CAPITALโ
โข2019: 16.6%
โข2020: 10.2%
โข2021: 18.9%
โข2022: 21.2%
โข2023: 21.0%
โขLTM: 19.1%
RETURN ON EQUITYโ
โข2019: 21.5%
โข2020: 12.8%
โข2021: 28.9%
โข2022: 28.0%
โข2023: 26.7%
โขLTM: 22.8%
$LVMH has excellent return metrics, highlighting the companyโs financial efficiency
REVENUESโ
โข2013: โฌ29.02B
โข2023: โฌ86.15B
โขCAGR: 11.49%
FREE CASH FLOWโ
โข2013: โฌ2.99B
โข2023: โฌ11.59B
โขCAGR: 14.52%
NORMALIZED EPSโ
โข2013: โฌ6.83
โข2023: โฌ30.33
โขCAGR: 16.07%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 503.22M
โขLTM Shares Outstanding: 499.83M
MARGINSโ
โขLTM Gross Margins: 68.5%
โขLTM Operating Margins: 25.6%
โขLTM Net Income Margins: 16.3%
***NOW TO VALUATION ๐ง
As stated above, investors can expect to receive ~19% MORE in EPS & ~13% MORE in FCF per share
Using Benjamin Grahamโs 2G rule of thumb, $LVMH has to grow earnings at a 9.99% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be less than (10.95%) the required growth rate:
2024E: โฌ30.12 (-0.7% YoY)* Dec
2025E: โฌ33.57 (11.4% YoY)
2026E: โฌ36.73 (9.4% YoY)
So, letโs assume $LVMH ends 2026 with โฌ36.73 in EPS & see its CAGR potential (dividends included) assuming different multiples:
23x P/E: โฌ844.79๐ต โฆ ~14.1% CAGR
22x P/E: โฌ808.06๐ต โฆ ~12.1% CAGR
21x P/E: โฌ771.33๐ต โฆ ~10.0% CAGR
20x P/E: โฌ734.60๐ต โฆ ~8.0% CAGR
As you can see, weโd have to assume 22x for $LVMH to have attractive return potential & while 22x is certainly reasonable given its quality, we should be aware that $LVMH 10-Year average multiple (24.92x) is elevated a bit due to the valuation spike in 2020-2021
If we โnormalizeโ the multiple & use the 5-year average period from 2014-2019 we have a mean of 20.83x ๐
While $LVMH deserves to trade at a premium multiple due to its quality, Iโm hesitant to rely on 23x because I want to ensure some margin of safety
Itโs safer to rely on ~21x earnings & be pleasantly surprised with some multiple expansion (rather than have the risk of multiple compression)
At 21x, we can still reasonably expect double-digit returns with some multiple expansion if growth estimates rise
Today at โฌ636๐ต $LVMH appears to be a decent consideration for investment (perhaps with a second tranche of accumulation if it gets to โฌ585๐ต)
$MC $LVMHF $LVMUY
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ.
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โ Dimitry Nakhla | Babylon Capitalยฎ
RT @BritishDividend: I need to know the remaining 2% because this guy is the ๐!
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RT @BritishDividend: I need to know the remaining 2% because this guy is the ๐!
My TipRanks Weekly .. Not too bad ๐๐ฝ๐ง๐ฝโโ๏ธ
Top 2% among ~751K investors ๐ฏ
#stocks #investing https://t.co/JusEVlEiiW tweet
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โ Capital Employed
Very inspiring article from @iancassel for all private investors who want to go full-time.
Becoming a full-time private investor is the pinnacle of financial achievement.
https://t.co/dR2CW4JLtK
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Very inspiring article from @iancassel for all private investors who want to go full-time.
Becoming a full-time private investor is the pinnacle of financial achievement.
https://t.co/dR2CW4JLtK
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โ Hidden Value Gems
A couple of interesting data points:
1๏ธโฃ Amazonโs AWS revenue over the last 12 months ($99 billion) was higher than the revenue of 468 companies in the S&P 500.
2๏ธโฃ Apple has bought back $646 billion in stock over the past 10 years, which is greater than the market cap of 491 companies in the S&P 500.
h/t @charliebilello
$AMZN $AAPL
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A couple of interesting data points:
1๏ธโฃ Amazonโs AWS revenue over the last 12 months ($99 billion) was higher than the revenue of 468 companies in the S&P 500.
2๏ธโฃ Apple has bought back $646 billion in stock over the past 10 years, which is greater than the market cap of 491 companies in the S&P 500.
h/t @charliebilello
$AMZN $AAPL
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โ Librarian Capital
Bill Ackman, after Musk interviewed Trump on Twitter, the platform that he owns:
"The public is tired of ... interviews which are curated and managed to elicit an outcome that is consistent with the politics of the owner"
No sense of irony here https://t.co/e5F2eHgbh2
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Bill Ackman, after Musk interviewed Trump on Twitter, the platform that he owns:
"The public is tired of ... interviews which are curated and managed to elicit an outcome that is consistent with the politics of the owner"
No sense of irony here https://t.co/e5F2eHgbh2
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