CFRHF - Richemont: Making Strides Towards The Luxury Big Leagues (Rating Downgrade)

2024-05-21 13:49:22 ET

Summary

• In a luxury sector that can be divided into ultra-lux, high-lux, and laggards, Richemont is somewhere between high-lux and the laggards.
• Following a decent FY24, Richemont continued to undergrow high-lux peers, and saw its profitability drop materially.
• The company's unique spot in the sector is reflected by its valuation, which is slightly too high.
• Consensus estimates are also too optimistic.

Compagnie Financière Richemont SA ( OTCPK:CFRHF )( OTCPK:CFRUY ), owner of Cartier, Van Cleef & Arpels, Buccellati, Montblanc, and multiple other renowned jewelry brands, is in its own unique category within the luxury sector.

Primarily focused on jewelry and watches, Richemont is a conglomerate that's viewed by the market as being mediocre, as reflected by its relative multiple compared to peers....

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