MS has superior quality (stable 40% margins, strong brand) vs LVMH but trades at a hefty 35x multiple; currently ranked highest among peers.

I actually thought about also looking at LVMH and MS again sort of as like the luxury playbook and how they are doing.

and by the way, we also look at MS and Nike, for example, and MS is kind of a close comp, right? So, if you look at their numbers, um, they're not in in the negative in terms of growth.

Um, but they're also significantly or growing significantly slower than they have to in the past or have in the past. And I think that's generally something that you see with all of those companies, which to some extent is a good thing for both of them because it means it's not necessarily just that LVMH brands um are not in demand anymore.

And just the same thing for for MS. So I think to me it shows that there's just in the entire industry they're currently struggling.

Um what I didn't fully understand I got to say that is for the longest time especially in like 2020 2021 when the companies were doing very well. It was always like the narrative that luxury companies are not as cyclical as fashion as otherwise because you know the wealthy people always spend there's no recession or anything and I think this is something that we have not seen yet like in the last couple of years um where the market didn't work out as well anymore for example um those companies actually did um struggle and you know they the growth was slowing down and I think to me and that's why I always liked MS a bit more and we discussed this in in the episodes is that MS is more concentrated um and it's also more desirable MS is actually going for like the top.1% of wealth globally and LVMH is a bit more um desirable where it's a bit more about you know if if you just land your new dream job for example um maybe you will buy an LVMH back which is just not that easy to do with MS. So I feel like um LVMH is more tied to the economy and you do see that in the numbers.

Um, I also think that if you just accept the fact that they are cyclical companies and we are value investors, probably now is the best time to buy them. Um, they look the ugliest, nobody wants to own them.

Um, but I mean, I think it's the first time either ever or in decades that LVMH is two consecutive years of negative growth. Um, MS is slowing down. So, I don't know. I feel like again, I probably want to look at them again for for an episode.

Um, and that's not because I feel like they should only be a Dtier, for example. Um, I do think they might just be um more attractively valued right now than in the long term.

And I should say that I mean MS you see it here like the multiple list is at 35. Um, so it's still pretty um pretty hefty. But I should also say if you compare for example the operating profits um you see MS operating profits, right?

It's a bit stagnant right now. Um but generally they're still growing. If you compare that to LVMH, they were declining quite quickly. Um so you do see um the primary reason there for example is the margins.

Um so margins for LVMH are at about 20% operating and cash flow. If you look at that for MS for example it is significantly higher. You still have 40% margins 30% cash flow margins and they are stable.

Um which is why they still earn significantly more money.

What you would have >> I think LVMH. Yeah. CD and >> it's tough. It's tough though because like Hermes is the is a better quality business. >> But then it could cut both ways. Well, but but then the valuation you're paying, you know, 20 times earnings versus first versus 35 times earnings almost kind of nullifies the difference between them.

I I I don't know. I would probably put them both like firmly in C or or maybe if you want Hermes a little higher, I think that's fine, too.

>> I always like the mass a bit more. I mean, this actually a good comment. I've owned LVMH and MS in the past, but I've never been 100% comfortable the artificial scarcity that the luxury industry relies on.

I think this is a point where I kind of I kind of get it, but then you look at the history of MS and for how long that worked um that I kind of feel like there are brands where consumers just accept that and I think MS is one of them.

Yeah. Yeah. Let's see here. Bought several MS bags, but they still play hard to get, so they have a massive reserve of growth. Well, well, that's that's how you see how difficult it is to get one of those backs, right?

That's why I believe MS is probably here and LVMH is slightly lower. Um, LVMH is a diversified ETF like, but Vuitton is way below MS. That's how I see it. I think there are people, I think Sean, you also said that in our episode, that prefer the diversification more, and I also get that.

>> to me if I have like a track equivalent of like hundreds of years um for concentrated bad it's also that I mean currently for example MS is primarily selling bags um I I think that could at some point maybe come to an end I don't think it's likely but it could but if the brand generally is still intact I think they could just sell something else um it doesn't need to be backed that's what MS is currently known for but I think as long as the brand is like strong it doesn't need to be backed so that's why I'm not too concerned um about the brand

All right. So, it's the highest rated stock right now out of MS, LVMH, and Nike. Um which is which is quite telling.