European equities don’t usually feature on my list of shares to buy. But every so often, something shows up that demands a closer look.
Europe’s one thing
Europe isn’t known for being at the cutting edge of innovation – the AI boom is being built in California and Shenzhen. And there are good reasons for this.
Across Europe, input costs are higher in key areas. Energy and labour are more expensive in France and Italy than in the US or China and that’s a big disadvantage in a number of industries.
There is, however, something Europe does uniquely well – luxury. The luxury goods business is about history, heritage and pure style. And that can’t be replicated through innovation or lower costs.
Louis Vuitton has just marked 130 years of its Monogram canvas. No incumbent or start-up is disrupting that with a better battery or a cheaper product.
The big dog
Warren Buffett and Terry Smith both know the power of a really great brand. And LVMH (ENXT:MC) owns a portfolio featuring Louis Vuitton, Dior, Tiffany, Bvlgari, Moët, Hennessy, and Sephora, among others.
Compare that with Hermès, which is largely one label, or Kering, which lives and dies by Gucci and Saint Laurent. A wider mix limits the damage when one line stumbles – and LVMH’s Q3 showed exactly that.
| Q3 2026 | Organic growth |
|---|---|
| Fashion & Leather Goods | -5% |
| Watches & Jewelry | +6% |
| Wines & Spirits | +6% |
| Selective Retailing | +8% |
| Group | +1% |
There’s another oddity. Unlike some of the big names in luxury – think Ferrari or Rolex – LVMH doesn’t limit its distribution so much, which means you can just walk into many stores and buy one of its bags.
You can’t do that with a Ferrari Amalfi or a Rolex Datejust – you have to be approved and the wait list is enormous. Yet LVMH still commands similar premium pricing, which means big margins.
The luxury downturn
The big reason the stock is down isn’t anything intrinsic to LVMH’s business. The macroeconomic picture has been weak and that’s been weighing on sales.
The company blamed a less buoyant China for Q3, while the US, Europe and Japan grew. But the general macro outlook is a risk going forward.
LVMH doesn’t discount its products to clear excess inventory. And unlike Hermès or Ferrari, weaker demand isn’t solved by calling the next name on the waiting list. While it does have some waiting lists, for many of its brands, there isn’t one.
The share price reflects it. LVMH recently lost its title as France’s most valuable listed company to L’Oréal, but that’s a potential opportunity.
Form is temporary, class is permanent
I think the long-term value of the brands remains intact. And the results point to slowing growth, not a collapsing business.
Organic sales are up 2% over nine months, and H1 operating margins held at 22.5%. And If demand returns, supply is ready to meet it.
Importantly, the valuation has fallen a long way.
A price-to-book (P/B) ratio of 2.88 is a 10-year low. And something similar is true of a price-to-earnings (P/E) ratio of 18.
That’s true of other names in European luxury, but I think LVMH has characteristics that make it stand out.
The stock is at decade-low multiples, while the underlying brands look as strong as ever. That has to be worth considering – if not now, then when?
Should you invest £5,000 in Lvmh Moët Hennessy – Louis Vuitton, Société Européenne right now?
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Stephen Wright does not own shares in any of the companies mentioned.
