Based on our purely quantitative scoring table, Paris-listed LVMH Moët Hennessy Louis Vuitton and Italiana-listed Moncler are the most undervalued. Although recent results and sentiment show slowing demand for luxury goods in certain geographic regions, The Edge Singapore believes these two stocks are attractive at current prices after incorporating valuation discounts for industry headwinds.
Apart from having solid fundamentals, both companies scored highly for the price-to-value analysis. For example, although LVMH’s one-year and three-year share price CAGR was negative to low single digits, the growth in revenue, net income, operating cash flow and free cash flow was significantly higher over the same period.
Similarly, Moncler’s growth in the value metrics was considerably much higher than its share price CAGR over comparable periods. Further, we think that the financial health of both companies are great, with current ratios above 1, Altman Z-scores above 3, interest cover of over 20 times and credit ratings higher than average peers.
See also: Singapore’s 240,000 millionaires spur spending on luxury brands
Disclaimer: This article is for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy or sell stocks, including the stocks mentioned herein. This article does not take into account an investor’s particular financial situation, investment objectives, investment horizon, risk profile, risk tolerance and preferences. Any personal investments should be done at the investor's own discretion and/or after consulting licensed investment professionals, at their own risk.
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