We are maintaining our fair value estimate for wide-moat Hermes at EUR 1,480 as the company reported another solid quarterly sales growth in the first quarter. Despite defensive characteristics during industry slowdowns and exposure to more affluent clientele, we believe Hermes is trading at expensive levels, at over 50 times FactSet consensus forward earnings.
Hermes benefits from unique positioning in the leather goods segment, supported by a supply/demand mismatch for its iconic bags.
Hermes expands production capacity in leather goods by around 6%-7% a year and could run into an overcapacity situation, should demand unexpectedly turn.
|
Metric
|
RMS
|
MC
|
KER
|
|---|---|---|---|
Price/Earnings (Normalized) | 53.70 | 26.31 | 14.14 |
Price/Book Value | 16.21 | 6.55 | 2.82 |
Price/Sales | 18.37 | 4.65 | 2.19 |
Price/Cash Flow | 48.13 | 17.42 | 9.57 |
|
Metric
|
RMS
|
MC
|
KER
|
|---|---|---|---|
Quick Ratio | 3.58 | 0.58 | 0.68 |
Current Ratio | 4.40 | 1.32 | 1.38 |
Interest Coverage | 99.32 | 23.09 | 12.44 |
|
Metric
|
RMS
|
MC
|
KER
|
|---|---|---|---|
Return on Assets (Normalized) | 24.29% | 11.43% | 8.33% |
Return on Equity (Normalized) | 33.36% | 27.46% | 20.97% |
Return on Invested Capital (Normalized) | 27.81% | 16.88% | 11.34% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
LVMHF
| Lvmh Moet Hennessy Louis Vuitton SE | — | Pvv | $425.5 Bil | |
LVMUY
| Lvmh Moet Hennessy Louis Vuitton SE ADR | Ldgxwmb | Jbmt | $425.5 Bil | |
HESAF
| Hermes International SA | — | Rcn | $263.8 Bil | |
HESAY
| Hermes International SA ADR | Sjzzyykb | Rfhg | $262.8 Bil | |
CHDRF
| Christian Dior SE | — | Wvkq | $143.9 Bil | |
CHDRY
| Christian Dior SE ADR | — | Vkbp | $143.7 Bil | |
SWGAY
| The Swatch Group AG ADR | Ycnpzcf | Kggnpx | $11.0 Bil | |
TPR
| Tapestry Inc | Nfcpcvv | Jsvrcc | $9.2 Bil | |
CPRI
| Capri Holdings Ltd | Dypyjpqm | Yxy | $4.3 Bil | |
REAL
| The RealReal Inc | Cqx | Svlk | $346.5 Mil |
