Wall Street Luxury for the Common Investor

With the recent publicity about the “Occupy Movement” and their highlighting the income disparity between the 99% and the 1%, I thought investors might be interested in learning a companies doing very well selling to the 1%.

The company is LVMH Moet Hennessy Louis Vuitton. Although based in Paris their shares trade on the pink sheets in the US under the symbol LVMUY.PK. They are the world’s largest luxury goods company and have 60 world class brands. Their business segments and leading brands are:

Segment	Brands
Wine & spirits	Hennessy, Moet & Chandon, Dom Perignon
Leather goods and accessories	Louis Vuitton, Fendi, Hermes
Watches & Jewelry	TAG Heuer, Bulgari, De Beers
Specialty Retailing	duty free products to cruise lines, Le Bon Marche

Le Bon Marche was founded in 1848 and is the oldest department store in the world. As a historical reference Napoleon’s nephew was Emperor of France when this store opened in Paris. These are top drawer brands with global name recognition. This is very good and LVMH is clearly a great company, but should you buy the stock?

They reported sales of 23 billion euro’s and net income of 5.3 billion for 2011. Their gross profit margin is 65%, a phenomenal rate and compares to Merck’s 64%. Their net income grew 22% last year and the net margin was 22% which is extremely high. They generated free cash flow of 3 billion euro’s. The importance of this is their business in not capital intensive so the cash flow can be used to pay down debt, make acquisitions (they acquired 125 year old jeweler Bulgari last year) and increase dividends. Revenue grew 16% last year but the shares are selling at a P/E of 15.

Wall Street Luxury for the Common Investor

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