Hermes International (RMS) AI Stock Analysis

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Hermes International

(OTC:RMS)

Rating:71Outperform

Price Target:

€2,504.00

▲(20.44% Upside)

Hermes International scores well due to its strong financial performance and positive earnings call sentiment, indicating robust growth potential and operational efficiency. However, the high valuation and mixed technical indicators suggest caution. The positive sentiment from the earnings call provides additional support to the stock's overall performance.

Positive Factors

Global Demand

All regions posted growth, with Japan leading at +23%, showing a strong global demand for Hermès products.

Market Position

The strength of Hermès' craftsmanship model enabled the group to finish another year of above-trend growth on a high note with 18% growth at constant rates in 4Q24 ahead of +15% in FY24.

Revenue Growth

Hermès achieved a firm revenue growth of 9% y/y in 1Q25, reaching EUR4.1bn, driven by strong demand across most product segments and regions despite a challenging global economic and geopolitical environment.

Negative Factors

Financial Forecasts

Sales and EBIT forecasts for Hermès have been trimmed by 2%, primarily due to adverse FX changes.

Future Challenges

The only negatives for 2025 are the high comparison base, further adverse FX hedging impact in 1H25 and additional €350m taxes in France.

Taxation Impact

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

$214.10B

Dividend Yield1.25%

Average Volume (3M)53.09K

Price to Earnings (P/E)47.9

Beta (1Y)1.44

Revenue Growth10.31%

EPS Growth0.54%

CountryFR

Employees24,203

SectorConsumer Cyclical

Sector Strength75

IndustryLuxury Goods

Share Statistics

EPS (TTM)21.39

Shares Outstanding105,569,410

10 Day Avg. Volume65,968

30 Day Avg. Volume53,095

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.09

Enterprise Value/Revenue15.37

Enterprise Value/Gross Profit21.88

Enterprise Value/Ebitda33.65

Forecast

1Y Price Target

$2,543.53

Price Target Upside22.34% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

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 generates revenue primarily through the sale of its luxury products, which include iconic items such as handbags, scarves, and watches. The company's revenue model is centered around direct retail sales through its own boutiques, online platforms, and select high-end department stores. Key revenue streams include the sale of leather goods, apparel, home goods, and fragrances. Additionally, Hermes benefits from a strong brand reputation that allows it to maintain premium pricing. The company has established significant partnerships with luxury retailers and engages in exclusive collaborations that enhance its market presence and drive sales. Seasonal collections and limited-edition releases also contribute significantly to its earnings, as they create demand and urgency among consumers seeking unique luxury items.

Hermes International Earnings Call Summary

Earnings Call Date:Jul 30, 2025

(Q2-2025)

% Change Since: -12.57%|

Next Earnings Date:Feb 12, 2026

Earnings Call Sentiment Positive

The earnings call reflected a generally positive sentiment with strong growth in sales and operating income, expansion in production capacity, and robust geographical performance. However, challenges such as the decline in the Perfume and Beauty division, the impact of a one-off tax, and cautious consumer behavior in China were noted.

Q2-2025 Updates

Positive Updates

Solid Growth in Sales and Operating Income

Hermès reported a solid growth with sales reaching EUR 8 billion, up by 8% at constant rates, and a 6% increase in current operating income. All regions showed progress, reflecting the strength of the Hermès model.

Expansion of Production Capacity

Hermès is pursuing investments in production capacity with four new leather workshops planned over the next four years, including the Maroquinerie de L'Isle d'Espanac in Charente set to open in September.

Strong Geographical Performance

All regions experienced growth: Europe (excluding France) up 13%, France up 9%, Japan up 16%, Asia up 3%, and America up 12%.

Leather and Saddles Division Growth

The Leather and Saddles division reported a 12% growth, maintaining its annual trajectory through increased production capacity.

Financial Robustness

Hermès posted an operating income of EUR 3.3 billion and a net profit of EUR 2.5 billion, both up 6%. Adjusted available cash flow stands at EUR 1.8 billion.

Negative Updates

Perfume and Beauty Division Decline

The Perfume and Beauty division saw a 4% decline in sales compared to a strong Q2 in the previous year, impacted by the launches of Barénia.

Impact of One-off Tax on Large French Companies

Hermès's tax expense was impacted by a one-off tax on large French companies, adding EUR 260 million to costs and increasing the tax rate by 7.5%.

Challenges in China

Despite growth, Hermès noted that Chinese clients are saving more and spending less due to economic uncertainty, affecting sales momentum.

Company Guidance

In the call, Hermès International reported solid financial results for the first half of 2025, with sales reaching EUR 8 billion, marking an 8% increase at constant exchange rates and a 7% rise at current rates. The current operating income grew by 6%, contributing to a net profit of EUR 2.5 billion after a one-off tax on large French companies. The company recorded a recurring operating income of EUR 3.3 billion, maintaining a recurring operating profitability of 41.4%. Hermès plans to continue its investments in production capacity, with a focus on leather workshops, aiming for robust growth across all divisions and geographical areas. The group also emphasized its commitment to sustainability and social responsibility, highlighting a bonus of EUR 4,500 distributed to all employees worldwide and an employment rate of 7.9% for people with disabilities in France.

Hermes International Financial Statement Overview

Summary

Hermes International demonstrates exceptional financial performance with strong revenue growth, high profitability, and robust cash flow. The balance sheet is solid with low leverage and strong equity ratios, highlighting financial stability.

Income Statement

Very Positive

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.

Balance Sheet

Very Positive

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.

Cash Flow

Very Positive

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.

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
EBITDA	6.99B	6.42B	5.29B	4.03B	2.53B
Net Income	4.60B	4.31B	3.37B	2.44B	1.39B
Balance Sheet
Total Assets	23.08B	20.45B	17.46B	13.85B	11.05B
Cash, Cash Equivalents and Short-Term Investments	11.64B	10.63B	9.22B	6.70B	4.73B
Total Debt	2.17B	2.06B	1.93B	1.80B	1.69B
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

Technical Analysis Sentiment

Negative

Last Price2079.00

Price Trends

50DMA

2283.64

Negative

100DMA

2339.25

Negative

200DMA

2361.06

Negative

Market Momentum

MACD

-77.46

Positive

RSI

33.49

Neutral

STOCH

35.99

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:RMS, the sentiment is Negative. The current price of 2079 is below the 20-day moving average (MA) of 2206.30, below the 50-day MA of 2283.64, and below the 200-day MA of 2361.06, indicating a bearish trend. The MACD of -77.46 indicates Positive momentum. The RSI at 33.49 is Neutral, neither overbought nor oversold. The STOCH value of 35.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:RMS.

Hermes International Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RMS	71 Outperform	$214.10B	47.86	27.36%	1.25%	10.31%	0.54%
Sector *	63 Neutral	£1.73B	10.49	4.37%	3.49%	0.66%	-39.52%
0NPL	―	€81.58B	17.94	19.54%	―	―	―
0OMK	―	€117.24B	48.64	6.19%	―	―	―
0IIH	―	€26.15B	35.88	4.91%	―	―	―
0HAU	―	€228.37B	20.77	16.88%	―	―	―

* Consumer Cyclical Sector Average

Performance Comparison

FR:RMS

Hermes International

2,079.00

-19.95

-0.95%

GB:0NPL

Christian Dior

453.00

-140.37

-23.66%

GB:0OMK

EssilorLuxottica SA

261.90

53.04

25.40%

GB:0IIH

Kering SA

211.75

-34.85

-14.13%

GB:0HAU

LVMH Moet Hennessy Louis Vuitton

472.90

-169.16

-26.35%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 31, 2025