Momentum Stock: Hermes International

18 mag 2023

Hermes International SA is a French luxury goods manufacturer that has been a distinguished name in the luxury industry since its inception in 1837. The company operates across a diverse range of high-end goods including leather accessories, ready-to-wear clothing, jewelry, silk and textile products, art of living and tableware, perfumes, and watches. It also handles the weaving, engraving, printing, dyeing, and finishing of textiles, as well as the purchasing, tanning, dyeing, and finishing of precious leathers. Its products are available through a global network of stores and also through specialized stores for watches, perfumes, and tableware. The company's rich history and global presence make it a noteworthy player in the luxury goods sector.

Hermes International's potential interest to investors could be attributed to its consistent financial performance and growth. In the past five years, it has shown a strong price performance with over 208% gain, and in the last year alone, the price of the stock has increased by more than 86%. This kind of sustained growth signifies the company's ability to adapt and prosper even in the face of market fluctuations and potential challenges.

The company's recent numbers also tell a story of healthy financials. It boasts a Market Capitalization of approximately $225.8 billion, a testament to its size and stability. It has a profit margin of 29.02%, and an operating margin of 41.54% on a trailing twelve-month basis, showing strong profitability. Additionally, the company has reported year-over-year quarterly revenue growth of 29.1% and earnings growth of 35.8%, demonstrating its ability to grow its operations and profits.

The company also has a robust dividend policy, currently offering a yield of 0.66%. Regular dividend payouts can be attractive to income-focused investors who are looking for a return on their investment beyond stock price appreciation.

In terms of valuation ratios, Hermes' Trailing Price to Earnings (PE) ratio is 61.78 and its Forward PE is 46.95, indicating expectations for future earnings growth. The Price to Sales (P/S) ratio on a trailing twelve-month basis is 16.29, signifying a premium valuation, which might be justified given the company's strong brand and steady performance.

In terms of risk, Hermes exhibits a Beta of 0.7474, which means it's less volatile than the overall market. This might appeal to conservative investors looking for less volatile investment options in a well-established, profitable company.

Despite its high valuations, the stable financials, sustained growth, and a lower risk profile make Hermes International SA a potentially attractive choice for investors looking for long-term investments in the luxury goods sector. Of course, it's always important for potential investors to conduct their own due diligence and consider their risk tolerance and investment strategy before investing.

In terms of any kind of short term entry, the stock has been consolidating for a while and you would need to keep an eye on which way it breaks especially as it has been going up for a while. I would pay particular attention to any upwards movement on both the RSI and MACD for any kind of confirmation. For downside risk management, a trailing stop loss of around 11% would have kept you in most of this trade. If it broke below that it could have been a good sign to exit and look for a new entry when the trend resumed.

As always how you interpret and decide to act on any results is up to you. This is just data not financial or trading advice and past performance is in NO WAY any guarantee of future performance. Think of it as a way to spot stocks you might be interested in and can add to your watch list and perform further research on and or discuss with your broker.

Again. Not trading advice. Industries and companies change. Trends can end. Do your own research / discuss it with your advisor, but might be one to watch.

5 giu 2023

Nota

Good pullback into a better value area.