Understanding LVMH Moët Hennessy - Louis Vuitton, Société Européenne's (ENXTPA:MC) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how LVMH Moët Hennessy - Louis Vuitton Société Européenne is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Could MC beat the long-term trend and outperform its industry?
MC's trailing twelve-month earnings (from 30 June 2019) of €6.6b has increased by 6.0% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.5%, indicating the rate at which MC is growing has slowed down. To understand what's happening, let's look at what's transpiring with margins and whether the entire industry is experiencing the hit as well.
In terms of returns from investment, LVMH Moët Hennessy - Louis Vuitton Société Européenne has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 7.6% exceeds the FR Luxury industry of 4.8%, indicating LVMH Moët Hennessy - Louis Vuitton Société Européenne has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for LVMH Moët Hennessy - Louis Vuitton Société Européenne’s debt level, has increased over the past 3 years from 14% to 15%.
What does this mean?
Though LVMH Moët Hennessy - Louis Vuitton Société Européenne's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as LVMH Moët Hennessy - Louis Vuitton Société Européenne gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research LVMH Moët Hennessy - Louis Vuitton Société Européenne to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MC’s future growth? Take a look at our free research report of analyst consensus for MC’s outlook.
- Financial Health: Are MC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.