Hermès Stock Increases

The French luxury brand is up over 20% YTD.

They have also done better than they had expected in Q4 which helps with the increase in the stock price. Not to mention its competition such as Gucci have done worse than expected and have seen a decrease in sales - a decrease in about 12% to be exact.

Why Did This Happen?

The famous Birkin bag is to blame for the increase. Sales have gone up 15% in the Birkin bag department. It is also important to note that they have increased their prices by about 7% despite consumers spending less on luxury goods. This did not seem to stop Hermès.

Should You Invest?

Let's break down the facts when we are looking to see if this is a stock you should add to your personal portfolio.

PE Ratio: 66.75
ROE: 29.58%

Taking a look at these 2 numbers we can see 2 things. Their return on equity is very good. The industry average is about 13%. However, their PE ratio is bigger than normal which could mean the stock is considered overvalued.

I would personally just monitor the stock. I think it is quite interesting that they have beat their sales expectations while the other giants were seeming to struggle. The PE ratio does not concern me that much just because there was this sudden surge. As always, do your own research.