LVMH, after the fall, an opportunity?
LVMH’s share price has lost 55% since its all-time high in spring 2023, with the price falling from more than €900 to €400. LVMH is by far the world’s leading company in the luxury sector, so after such a sharp stock market decline, could the stock once again soon represent an opportunity?
To answer this question analytically, I suggest looking at stock market valuation ratios and technical analysis signals from the financial markets.
· Stock market valuation ratios: forward P/E, traditional P/E and Price-to-Sales
· Medium- and long-term technical analysis signals based on the weekly Japanese candlestick chart
But first, let us recall why LVMH’s share price has lost more than 50% since its 2023 record high.
The main reason is the sharp reversal in the luxury cycle after several exceptional years of growth. From 2023 onwards, demand gradually normalized, with a particularly pronounced slowdown in luxury consumption in China, a strategic market for LVMH. The group also suffered from the consequences of the very significant price increases implemented in recent years, which gradually pushed part of its so-called “aspirational” customer base away. In 2024, LVMH’s revenue therefore declined by 2%, followed by another 1% decline in 2025, while recurring operating profit suffered more significantly.
This was compounded by a less favorable macroeconomic environment, geopolitical and trade tensions, as well as uncertainties surrounding consumer spending in the United States and Asia. The stock market primarily penalized the decline in earnings expectations: LVMH was valued at very high multiples at its 2023 peak, based on growth that appeared capable of continuing for a prolonged period. When that growth reversed, the contraction in the valuation multiple amplified the decline in earnings.
The question now is whether this sharp decline has sufficiently priced in the current difficulties to once again offer an attractive entry point.
First piece of good news: from a stock valuation perspective, LVMH is once again an opportunity, especially compared with its competitors.
The table below shows the global top 5 listed companies in the luxury sector, together with their forward P/E ratios. After a 55% decline from its all-time high, LVMH now trades at a significant discount to its competitors in terms of stock market valuation.
https://www.tradingview.com/x/icbBvX00/
However, before returning to a buying position, the technical trend needs to stop being bearish, and the Ichimoku system can be useful in identifying this. The bearish trend will be over when the market is able to move back above the weekly Kumo of the Ichimoku system.
The chart below shows LVMH’s weekly Japanese candlesticks, together with the traditional P/E, forward P/E and Price-to-Sales valuation ratios. The stock remains in a bearish trend as long as the price trades below the weekly cloud of the Ichimoku system.
https://www.tradingview.com/x/okitm69r/
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