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Hermes International (FR:RMS)
:RMS
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Hermes International
(OTC:RMS)
Rating:81Outperform
Price Target:―
Positive Factors
Craftsmanship and Innovation
Hermès inaugurated a new leather goods workshop in Riom, France that further strengthens its outstanding workmanship.
Financial Performance
Hermès recorded +17.6% sales growth at constant rates in Q4 ahead of +11% consensus and accelerating sequentially from +11% in Q3.
Market Position
The growth differential between Hermès and the rest of the sector is expected to remain sizeable, thanks to untapped pricing power, high visibility for leather goods, and a loyal clientele.
Negative Factors
Competitive and Economic Risks
Risks include supply chain disruptions, unfavourable forex impacts, intensifying competition, and slower-than-expected tourism recovery.
Foreign Exchange Impact
Sales and EBIT forecasts for Hermès have been trimmed by 2%, primarily due to adverse FX changes.
Tax and Regulatory Challenges
Some near-term negatives include likely low inventory levels for leather goods at the end of FY24, temporary disruption from wildfires in LA, extra €350m French taxes in 2025, and demanding comparatives.
Hermes International (RMS) vs. iShares MSCI France ETF (EWQ)
Market Cap
$267.78B
Dividend Yield0.94%
Average Volume (3M)63.12K
Price to Earnings (P/E)58.3
Beta (1Y)1.39
Revenue Growth12.98%
EPS Growth6.62%
CountryFR
Employees24,203
SectorConsumer Cyclical
Sector Strength74
IndustryLuxury Goods
Share Statistics
EPS (TTM)21.30
Shares Outstanding105,569,410
10 Day Avg. Volume58,672
30 Day Avg. Volume63,118
Financial Highlights & Ratios
PEG Ratio16.85
Price to Book (P/B)14.84
Price to Sales (P/S)0.00
P/FCF Ratio50.04
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2,719.09Price Target Upside8.94% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Hermes International Business Overview & Revenue Model
Company DescriptionHermès International Société en commandite par actions engages in the production, wholesale, and retail of various goods. The company offers leather goods and saddlery, such as bags for men and women, clutches, briefcases, luggage, small leather goods, diaries and writing objects, saddles, bridles, and a range of equestrian products and clothing; ready-to-wear garments for men and women; and accessories, including jewelry, belts, hats, gloves, the Internet of Things products, and shoes. It also provides silk and textiles for men and women; art of living and tableware products; perfumes; and watches. In addition, the company is also involved in weaving, engraving, printing, dyeing, finishing, and producing textiles; and purchasing, tanning, dyeing, finishing, and selling precious leathers. It sells its products through a network of 303 stores worldwide. The company also sells watches, perfumes, and tableware through a network of specialized stores. Hermès International Société en commandite par actions was founded in 1837 and is based in Paris, France. Hermès International Société en commandite par actions operates as a subsidiary of H51 SAS.
How the Company Makes MoneyHermes International primarily generates revenue through the sale of its luxury products. The company's key revenue streams include leather goods and saddlery, which account for the largest portion of sales, followed by ready-to-wear and accessories, silk and textiles, perfumes, watches, and other products. Hermes maintains a global retail network, including flagship stores in major cities, which enhances its brand exclusivity and customer reach. In addition to retail sales, the company benefits from selective wholesale distribution and e-commerce platforms. Strategic partnerships and collaborations with other luxury brands and artists further bolster Hermes' market presence and revenue potential. The brand's commitment to quality and exclusivity ensures consistent demand and premium pricing, contributing significantly to its financial success.
Hermes International Financial Statement Overview
Summary
Hermes International exhibits strong financial performance across all verticals. The income statement reveals impressive growth and profitability, supported by high margins. The balance sheet is characterized by low leverage and strong equity, ensuring financial stability. Cash flow is robust, with strong cash generation and conversion rates, underscoring the company's liquidity and investment capacity.Income Statement
Hermes International has shown robust revenue growth with a 12.96% increase from 2023 to 2024, reflecting strong demand in the luxury goods sector. Gross Profit Margin remains high at 70.23%, indicating efficient production and high pricing power. Net Profit Margin improved to 30.33%, showcasing enhanced profitability. EBIT and EBITDA margins are solid at 40.54% and 46.07% respectively, highlighting operational efficiency.85
Very Positive
Balance Sheet
The company maintains a strong balance sheet with a low Debt-to-Equity Ratio of 0.13, reflecting minimal leverage risk. The Equity Ratio stands at a robust 75.06%, indicating a strong equity base and financial stability. Return on Equity is impressive at 26.56%, demonstrating effective utilization of equity to generate profits.90
Very Positive
Cash Flow
Hermes International shows a significant increase in Free Cash Flow, with growth from the previous year, supporting strategic investments and shareholder returns. The Operating Cash Flow to Net Income Ratio of 1.12 indicates strong cash generation ability. Free Cash Flow to Net Income Ratio is high at 1.12, reflecting excellent cash conversion from profits.88
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 15.17B | 13.43B | 11.60B | 8.98B | 6.39B | Gross Profit |
| 10.66B | 9.71B | 7.66B | 5.89B | 3.91B | EBIT |
| 6.15B | 5.65B | 4.88B | 3.59B | 2.06B | EBITDA |
| 6.99B | 6.42B | 5.29B | 4.03B | 2.53B | Net Income Common Stockholders |
| 4.60B | 4.31B | 3.37B | 2.44B | 1.39B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 11.64B | 10.63B | 9.22B | 6.70B | 4.73B | Total Assets |
| 23.08B | 20.45B | 17.46B | 13.85B | 11.05B | Total Debt |
| 2.17B | 2.06B | 1.93B | 1.80B | 1.69B | Net Debt |
| -9.47B | -8.56B | -7.29B | -4.89B | -3.05B | Total Liabilities |
| 5.75B | 5.24B | 5.00B | 4.43B | 3.66B | Stockholders Equity |
| 17.33B | 15.20B | 12.44B | 9.40B | 7.38B |
| Cash Flow | Free Cash Flow | |||
| 5.14B | 3.58B | 3.73B | 2.92B | 1.22B | Operating Cash Flow |
| 5.14B | 4.33B | 4.25B | 3.45B | 1.66B | Investing Cash Flow |
| -1.20B | -995.00M | -646.00M | -716.00M | -453.60M | Financing Cash Flow |
| -3.05B | -1.79B | -1.24B | -869.00M | -810.20M |
Hermes International Technical Analysis
Positive
2496.00
Price Trends
2412.31
Positive
2489.74
Positive
2282.20
Positive
Market Momentum
51.65
Negative
61.31
Neutral
78.58
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:RMS, the sentiment is Positive. The current price of 2496 is above the 20-day moving average (MA) of 2453.41, above the 50-day MA of 2412.31, and above the 200-day MA of 2282.20, indicating a bullish trend. The MACD of 51.65 indicates Negative momentum. The RSI at 61.31 is Neutral, neither overbought nor oversold. The STOCH value of 78.58 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:RMS.
Hermes International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $267.78B | 58.26 | 28.67% | 0.94% | 12.98% | 6.62% | |
62 Neutral | $6.97B | 11.36 | 2.77% | 3.91% | 2.66% | -22.00% | |
| €83.93B | 16.10 | 22.73% | 2.76% | ― | ― | ||
| €119.28B | 50.30 | 6.00% | 1.51% | ― | ― | ||
| €22.38B | 19.76 | 7.52% | 6.30% | ― | ― | ||
| €201.13B | 31.57 | 20.60% | 1.74% | ― | ― | ||
| €252.22B | 19.90 | 19.53% | 2.60% | ― | ― |
* Consumer Cyclical Sector Average
Performance Comparison
FR:RMS
Hermes International
2,496.00
334.71
15.49%
GB:0NPL
Christian Dior
463.60
-235.78
-33.71%
GB:0OMK
EssilorLuxottica SA
260.40
55.19
26.89%
GB:0IIH
Kering SA
178.05
-141.93
-44.36%
GB:0NZM
L'Oreal
385.45
-59.31
-13.34%
GB:0HAU
LVMH Moet Hennessy Louis Vuitton
494.57
-242.94
-32.94%
Hermes International Earnings Call Summary
Earnings Call Date:Feb 14, 2025
(Q4-2024)
| % Change Since: -10.43%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance by Hermès in 2024 with notable growth in key regions and divisions, particularly in Leather Goods. The company demonstrated resilience and commitment to sustainability and employee welfare. However, challenges were noted in the Watches segment and the Chinese market, along with operational disruptions due to natural disasters in the U.S.Q4-2024 Updates
Positive Updates
Revenue and Growth Performance
Hermès achieved a revenue of EUR 15.2 billion in 2024, up 15% at constant exchange rates and 13% at current exchange rates. The fourth quarter revenue was EUR 4 billion, marking an 18% increase at both constant and current exchange rates.
Regional Growth
Significant growth was observed in all regions: France (+13%), Europe (+19%), Japan (+23%), Asia excluding Japan (+7%), and America (+15%).
Leather Goods Success
The Leather division demonstrated remarkable growth with an 18% increase, supported by strong demand and new product introductions.
Sustainability Achievements
Hermès reduced Scope 1 and Scope 2 emissions by 64% compared to 2018 and achieved a 50% drop in intensity for Scope 3 emissions.
Employment and Social Commitment
The company added 2,300 new jobs in 2024, with 1,300 in France, and surpassed 25,000 employees globally. A bonus of EUR 4,500 will be distributed to all employees in 2024.
Negative Updates
Watches Segment Decline
The Watches division saw a 4% decrease in sales, impacted by difficult market conditions and high comparison basis from previous years.
Challenges in China
Despite overall growth, Greater China showed less growth compared to other regions, indicating some market challenges.
Impact of Natural Disasters in the U.S.
Natural events such as fires and blizzards in the U.S. affected store operations, potentially impacting sales figures.
Company Guidance
In the recent earnings call for Hermès, the company highlighted its robust financial performance for 2024 despite economic and geopolitical uncertainties. Hermès reported a revenue of EUR 15.2 billion, marking a 15% increase at constant exchange rates. The company's current operating income rose by 9% to EUR 6.2 billion, with an available adjusted cash flow of EUR 3.8 billion, up 18%. The net profit group share increased by 7% to EUR 4.6 billion, maintaining a net profitability in excess of 30%. Hermès continued its strategic investments, with operational investments totaling EUR 1.1 billion, focusing on production capacity and the expansion of its retail network. Notably, the company strengthened its workforce, surpassing the threshold of 25,000 employees, with over 62% based in France. Hermès also emphasized its commitment to sustainability, achieving significant reductions in carbon emissions and reinforcing diversity initiatives. The company plans to distribute a bonus of EUR 4,500 to all employees worldwide in 2024, highlighting its dedication to sharing growth with its workforce.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.