LVMH December 2024 Valuation Model and Risk Framework
LVMH December 2024 Valuation Model and Risk Framework
This LVMH valuation model includes a DCF valuation, company comparable relative value matrix, financial forecasts, segment breakdown, and detailed operating model. Assumptions can easily be adjusted by the user.
Long term, we think that LVMH (MC FP, OTC: LVMUY) has >30% upside, especially once the new administration’s tariffs are made clear and a new Chinese stimulus is announced post-inauguration. About 31% of the company’s luxury sales come from China. Given, the company’s size, scale, growth and diversification, it should arguably trade at a premium to Prada, Kering, and Moncler. There has also been aggressive insider buying from Bernard Arnault, just $22 million last week & $78 million last month.
The entire sector has seen growth slow this year because of a weaker Chinese consumer, and a global shift in consumer spending from goods to services and experiences. The entire comparable set (next page) saw outsized growth in 2021/2022, during Covid lockdowns, which has reversed short term after spending was pulled forward. Long term, 15x 2025e EBIT is cheapish for high luxury.
Business Overview
LVMH Moet Hennessy Louis Vuitton operates as a luxury goods group. LVMH manages 75 brands, known as "Maisons," across various luxury sectors. The Company produces and sells wine, cognac, perfumes, cosmetics, luggage, watches, and jewelry. LVMH Moet Hennessy Louis Vuitton serves customers worldwide. LVMH has close to ~70% gross margins, ~25% EBIT margins, and very modest net debt. The company is in the top 20 global market capitalizations today, and one of the few outside of tech, energy, and Berkshire. Founder Arnault grew a $15 million investment in 1985 into a $300 billion company today. He was the richest person in the world in 2022 and 2023.
Arnault was a big inspiration for Steve Jobs and his premium pricing at Apple.
A family-run group, LVMH Moët Hennessy Louis Vuitton strives to ensure the long-term development of each of its Houses in keeping with their identity, their heritage and their expertise. LVMH makes wines and spirits (Dom Pérignon, Moët & Chandon, Veuve Clicquot, and Hennessy), perfumes (Christian Dior, Guerlain, and Givenchy), cosmetics (Make Up For Ever, Fresh, and Benefit), fashion and leather goods (Marc Jacobs, Givenchy, Kenzo, and Louis Vuitton), and watches and jewelry (TAG Heuer, Bulgari). LVMH's selective retail division includes Sephora cosmetics stores, Le Bon Marché, a Paris department stores, and DFS Group (duty-free shops).
LVMH is owned by holding company Christian Dior and Bernard Arnault, the richest man in France. The majority of its sales were generated in Asia.
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