Hermes International (RMS) AI Stock Analysis

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Hermes International

(OTC:RMS)

Rating:71Outperform

Price Target:

€2,622.00

▲(7.99%Upside)

Hermès International's strong financial performance is the most significant factor driving the overall score, supported by positive earnings call insights. However, the high valuation and mixed technical indicators suggest a cautious approach. Investors should consider the stock's high pricing relative to earnings and potential market challenges.

Positive Factors

Craftsmanship and Market Position

The company's artisanal approach, attention to detail, and commitment to preserving traditional craftsmanship contribute to its unique position in the luxury market.

Operational Performance

Hermès recorded +17.6% sales growth at constant rates in Q4 ahead of +11% consensus, showcasing its ability to exceed market expectations.

Revenue Growth

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

Negative Factors

Comparative and Tax Challenges

Some near-term negatives include likely low inventory levels for leather goods, temporary disruption from wildfires in LA, extra €350m French taxes, and demanding comparatives.

Forex and Tax Impact

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

Supply Chain and Competition Risks

Risks include supply chain disruptions, unfavourable forex impacts, intensifying competition, and slower-than-expected tourism recovery.

Hermes International (RMS) vs. iShares MSCI France ETF (EWQ)

Market Cap

€254.07B

Dividend Yield1.01%

Average Volume (3M)58.59K

Price to Earnings (P/E)55.3

Beta (1Y)1.42

Revenue Growth12.98%

EPS Growth6.62%

CountryFR

Employees24,203

SectorConsumer Cyclical

Sector Strength76

IndustryLuxury Goods

Share Statistics

EPS (TTM)21.30

Shares Outstanding105,569,410

10 Day Avg. Volume63,485

30 Day Avg. Volume58,595

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

€2,699.87

Price Target Upside11.20% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

Hermes International Business Overview & Revenue Model

Company DescriptionHermes International, often referred to simply as Hermes, is a renowned French high-fashion luxury goods manufacturer established in 1837. The company specializes in the design, manufacture, and retail of high-quality products across several categories, including leather goods, lifestyle accessories, home furnishings, perfumery, jewelry, watches, and ready-to-wear. Hermes is celebrated for its craftsmanship and artisanal production methods, which have solidified its reputation as a leader in the luxury sector.

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 Earnings Call Summary

Earnings Call Date:Feb 14, 2025

(Q4-2024)

% Change Since: -12.87%|

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.

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

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Neutral

Last Price2428.00

Price Trends

50DMA

2403.18

Positive

100DMA

2499.57

Negative

200DMA

2298.32

Positive

Market Momentum

MACD

-4.42

Positive

RSI

48.78

Neutral

STOCH

31.15

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:RMS, the sentiment is Neutral. The current price of 2428 is below the 20-day moving average (MA) of 2473.00, above the 50-day MA of 2403.18, and above the 200-day MA of 2298.32, indicating a neutral trend. The MACD of -4.42 indicates Positive momentum. The RSI at 48.78 is Neutral, neither overbought nor oversold. The STOCH value of 31.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
MC	75 Outperform	€238.91B	19.03	19.53%	2.72%	-1.71%	-17.20%
EL	72 Outperform	€111.66B	47.09	6.00%	1.61%	4.38%	1.71%
RMS	71 Outperform	€254.07B	55.27	28.67%	1.01%	12.98%	6.62%
CDI	71 Outperform	€80.93B	15.54	22.73%	2.89%	-1.71%	-17.39%
Sector *	62 Neutral	$6.91B	11.20	2.93%	3.90%	2.68%	-25.01%
KER	62 Neutral	€21.13B	18.65	7.52%	3.48%	-12.12%	-62.09%

* Consumer Cyclical Sector Average

Performance Comparison

FR:RMS

Hermes International

2,395.00

254.49

11.89%

FR:CDI

Christian Dior

444.00

-239.31

-35.02%

FR:KER

Kering SA

172.36

-140.19

-44.85%

FR:EL

EssilorLuxottica SA

245.10

43.04

21.30%

FR:MC

LVMH Moet Hennessy Louis Vuitton

477.20

-240.06

-33.47%

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.