lvmh is a French holding company specializing in luxury goods it owns such Brands like Louis Vuitton Moet Hennessy Kenzo jeni bulgary tag oer Tiffany or Sephora its CEO is Bernard arau the richest person on Earth and just few weeks ago he decided to make some major changes to his business he appointed his son Frederick arau as the managing director of The Family holding company that actually controls lvmh and also another company that you may have heard of called Dior so Bernard never stated that he's retiring but the process of moving aside and letting his kids control more and more of the Empire has definitely accelerated so let's see how strong is this Empire and can we get a piece of it if you were to invest $1,000 into this company 10 years ago you could buy around five shares and now they would be worth something close to $3,810 and through that time you would also get $375 as dividends so if we add together the current value of shares and the the dividends we get $4,185 and that is a gain of $3 18% in 10 years that is very [Music] nice individual insiders that is a check 48% of the company is owned by individual insiders well actually that is not exactly true individual insiders so board members and the management own around 0.5% of the company but through the Family holding company bernna arau and his kids own 48% of lvm Ag and they have 63.5% of voting rights and are they buying recently that is n x we don't see any transactions from insiders and the super investors own this company that is a check there's one super investor and it is Thomas Russo and is he buying right now that is a check he is buying but only a small amount of [Music] shares return on invested Capital that is a check at 14% 10year median returns and we want to see this number higher than 10% so that is nice and what do we know about net net profit margin it is a check at 17.6% and the industry average is 13.4% but what is very significant is that lvmh has the second best margin after Herms and I am planning on making a video about Herms in the coming weeks so if you don't want to miss it then subscribe and press the Bell icon to get notifications about new videos and now let's take a look at share buyb it is another check in the last 10 years they bought back 0.8% of shares so not a meaningful difference but a trajectory is positive and the debt it is a check it would take one year to pay the long-term debt with a current free cash flow so we have checks all around it looks like lvmh Empire is really strong [Music] Revenue growth that is an X at 9% 10-year compound annual growth rate and we would like to see this number higher than 10% so they are close but not close enough free cash flow growth that is a check at 11.2% in the last 10 years so just over 10% that we are looking for and earnings per share growth that is also a check at 13.5 5% in the last 10 years so growth is nice but not exceptional but if we consider that they are selling physical products and that they are the biggest company in that industry then it's starts to look quite impressive the dividend yield is 1.8% so shareholders can expect to get $13.97 cents annually per every share and the payout ratio that is a check at 43% and we want to see the payout ratio somewhere between 20 and 50% so what it means is that we are getting 43% of the earnings as dividends and the rest can be used by the company if you would like to learn more and become an informed dividend investor and take control of your finances check out our dividend investing course the link is in the description and what do we know about dividend growth of lvmh it is a check at 16.6% 5-year growth rate such growth is super impressive and even though we can see some ups and downs through the years in the long term it is growing very nicely price to earnings ratio is 23.5 so that is close to the average PE of the S&P 500 but to properly value lvmh we will have to estimate its growth for the next 10 years and we will make three scenarios so in the low scenario we will estimate a growth of 5% for the first 5 years and then 4% in the medium 6% and then 5% and in the high scenario 11% % and then 9% growth so the low scenario anticipates that they will do a bit worse than the predicted growth of the luxury industry which is 5.7% medium is predicting that it will do just as well as the industry and the high one is a story in which they continue to grow at the same rate they did in the last decade so with such estimates the intrinsic value in the scenario is $385 in the medium $414 and in the high scenario $580 but we have to always apply a margin of safety to those prices I use a 30% one but you can use any margin that is right for you that makes you feel comfortable and with this margin we get in the low scenario $269 in the medium $290 and in the high one $46 and the current price is around $762 so it is all in the red lvmh is expensive but if you analyze such a great company it is hard to expect anything [Music] else now let's take a quick look at our stock ranking to get an overview of lvmh so here is the company and let's get to the end where we have all of our scores and we see that they have an overall score of 2.1 that is very nice let's sort those 90 companies that are in our ranking by that score and we see that lvmh is the sixth best company we analyzed of course if we want to invest test we also have to take the valuation into account because we want to buy great companies but we also want to buy them at a fair price okay so let's take a look at the company overview and it all just looks great of course growth is not exceptional but it is definitely a great company so what is the bare case for for lvmh well first of all we have to consider the danger concerning the leadership changes it is a process but we see that Bernard arau is passing the Reigns of the company to his children all five of them hold important positions in lvmh and they may become great leaders but it is just another unknown for the business there is also a risk of brand dilution overexpansion can dilute the luxury brand image maintaining the exclusivity and Prestige of lvm Maes Brands is crucial and any mistake in brand management can harm the company's reputation and profitability and there is a risk of global recession and that can severely impact consumer spending on luxury goods during economic problems consumers concentrate on essential goods and not luxury items so such a recession can be more harmful to a company like lvmh and what is the bull case fast economic growth in Emerging Markets mainly in China and India can drive increased demand for luxury goods lvmh is well positioned to take advantage of such growth with its diverse brand portfolio lvmh owns some of the most prestigious and recognizable luxury brands in the world the appeal and Heritage of those Brands provide a strong competitive advantage and enables premium pricing and finally they have a track record of successful Acquisitions such as Tiani and Co which can diversify their portfolio and provide New Growth Avenues strategic Acquisitions can further strengthen the market position of lvmh if you enjoyed this video then check out my analysis of Mado a company that creates luxury watches since 1881 thank you so much for watching and see you in the next one