Oxford Industries Inc (NYSE:OXM), a US$1.5b small-cap, operates in the consumer discretionary industry, whose performance is predominantly driven by consumer confidence. Macro elements tend to determine how fast, and how often, consumers buy luxury goods. Consumer discretionary analysts are forecasting for the entire industry, a highly optimistic growth of 44% in the upcoming year , and a massive growth of 85% over the next couple of years. the growth rate of the US stock market as a whole. Today, I’ll take you through the sector growth expectations, as well as evaluate whether Oxford Industries is lagging or leading in the industry.
What’s the catalyst for Oxford Industries’s sector growth?
Significant store closures were an sign of changing consumer taste and rising online competition. In the past year, the industry delivered growth of 2.2%, though still underperforming the wider US stock market. Oxford Industries leads the pack with its impressive earnings growth of 44% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 7.7% compared to the wider luxury goods. sector growth hovering in the forties next year. As a future industry laggard in growth, Oxford Industries may be a cheaper stock relative to its peers.
Is Oxford Industries and the sector relatively cheap?
The luxury goods industry is trading at a PE ratio of 20.58x, in-line with the US stock market PE of 20.18x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 12% on equities compared to the market’s 10%. On the stock-level, Oxford Industries is trading at a PE ratio of 19.61x, which is relatively in-line with the average luxury goods. stock. In terms of returns, Oxford Industries generated 16% in the past year, which is 3.4% over the luxury goods. sector.
If Oxford Industries has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a luxury goods industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the consumer discretionary sector. However, before you make a decision on the stock, I suggest you look at Oxford Industries’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has OXM’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oxford Industries? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.