Editing LVMH Moët Hennessy - Louis Vuitton, Société Européenne
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When estimating the expected return on an investment over a period of 12-months or more, the most accurate approach is a DCF. In the following section, there are 2 valuation methods, the DCF model and the relative valuation, both models are used in the report for completeness. | When estimating the expected return on an investment over a period of 12-months or more, the most accurate approach is a DCF. In the following section, there are 2 valuation methods, the DCF model and the relative valuation, both models are used in the report for completeness. | ||
For the DCF model, the weighted average between the bull case, base case, and bear case obtained $1142.65 | For the DCF model, the weighted average between the bull case, base case, and bear case obtained $1142.65 which has a 31.29% upside. | ||
A simple 50% base case, 25% bull case, and bear case are used because of the uncertainty of the decision of the FOMC on the terminal interest rate. The new reported number on the CPI, consumer price index, has back down to 3% whereas the previous number is 4%. If the FOMC, federal open market committee, does not decrease the interest rate in around September or November, the market will likely be looking at deflation instead. Although the non-Farm payroll has a strong number and a low unemployment rate, the participation rate is much lower than the average, which indicates that the unemployment is not accurately reflected. According to the backtesting research, whenever the FOMC decreases the interest rate, the transition from hawkish to dovish sentiment, resulting in a short squeeze of the stock market and then a big fall, the target is likely to be reached in the next few months when the interest rate is not likely to be increased. A dovish sentiment is an interest rate policy that is more accommodative to stimulate spending in an economy, which is clearly good for the luxury good market. | A simple 50% base case, 25% bull case, and bear case are used because of the uncertainty of the decision of the FOMC on the terminal interest rate. The new reported number on the CPI, consumer price index, has back down to 3% whereas the previous number is 4%. If the FOMC, federal open market committee, does not decrease the interest rate in around September or November, the market will likely be looking at deflation instead. Although the non-Farm payroll has a strong number and a low unemployment rate, the participation rate is much lower than the average, which indicates that the unemployment is not accurately reflected. According to the backtesting research, whenever the FOMC decreases the interest rate, the transition from hawkish to dovish sentiment, resulting in a short squeeze of the stock market and then a big fall, the target is likely to be reached in the next few months when the interest rate is not likely to be increased. A dovish sentiment is an interest rate policy that is more accommodative to stimulate spending in an economy, which is clearly good for the luxury good market. | ||