PLEXOR's opinion about LVMH-Moet Hennessy Louis Vuitton (OTCPK:LVMHF) current market value is discussed in this post.
More specifically the Free Cash Flows future growth rate expressed by the market and embedded into current shares price is investigated based on the evidences from the particular method employed.
The aforementioned rate is then compared with an estimated sustainable future growth rate to check if any under/over or fair evaluation may exist.
In a DCF model, it is possible to infer from the current market price a 6.3% perspective annual FCFs growth rate for the next 10 years, based on: • €3,895 M of FCF (Net cash from operating activities minus acquisitions of property, plant and equipment) as a starting point • long term growth rate estimate for the FCF of 2.8% per year (annual world economy forecasted growth rate towards the year 2040) • €9.6 B of total estimated value of operating leases, stock options and unvested bonus shares • applying an estimated WACC value of 8.9% (Weighted Average Cost of Capital has been computed based on an estimated 33% effective tax rate, an adjusted beta of 1.03; both the Gordon and the CAPM models were applied. Equity Risk Premium: 6.12%).
The perspective (10Ys) annual FCFs growth rate expressed by the market is just slightly higher than the 6% organic growth in sales reported by the Company for the year 2015 in its 2015 Full Year Results presentation.
PLEXOR's opinion, at per share price of €146.10 (LVMH Moet Hennessy Louis Vuitton SE, H16.38 BST on 6 April 2016, Paris Stock Exchange) and based on assumptions and estimates made, is now: "hold". Horizon: Until next earnings date or until any eventual future material announcement by the Company if it happens earlier. This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
DISCLOSURE: I WROTE THIS POST MYSELF, AND IT EXPRESSES MY OWN OPINIONS. I AM NOT RECEIVING COMPENSATION FOR IT FROM AND I HAVE NO BUSINESS RELATIONSHIP WITH ANY COMPANY WHOSE STOCK IS MENTIONED IN THIS POST. I HAVE NO POSITIONS IN ANY STOCKS MENTIONED IN THIS POST, AND NO PLANS TO INITIATE ANY POSITIONS WITHIN THE NEXT 72 HOURS. I UNDERTAKE NO DUTY TO UPDATE THIS POST IN LIGHT OF NEW INFORMATION OR FUTURE EVENTS. REASONABLE EFFORT HAS BEEN USED TO ENSURE ACCURACY OF THE INFORMATION PROVIDED. HOWEVER, THERE MAY BE INACCURACIES DUE TO HUMAN OR OTHER ERROR. THOSE INACCURACIES INCLUDE, BUT ARE NOT LIMITED TO, INCONSISTENCIES, OMISSIONS, AND SPELLING MISTAKES. NO RESPONSIBILITY IS ASSUMED FOR ANY ERRORS OR FOR THE CONSEQUENCES OF RELYING OR ACTING ON THE INFORMATION PROVIDED IN THIS POST. IN NO EVENT WILL THE CONTRIBUTOR BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, NO MATTER WHAT THE CAUSE. PLEASE CHECK MY PROFILE ON SA FOR FURTHER DISCLOSURES AND DISCLAIMERS.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.