Italian stock report - Luxottica Group

ITALY

Luxottica Group in 4th consecutive fall, nears a 16-month low October 16, 2017 17:30 CEST

NEWS BITES - EUROPE

Luxottica Group (MI:LUX), Italy's largest Personal & household goods company by market cap, slipped further on Monday, sliding an additional 20.0c (0.4%) to trade at EUR45.94. The stock dropped 2.1% on Thursday and 0.1% on Friday. This brought its 4-day fall to 3.0%, compared with the FTSE MIB Index which rose 92.4 points (0.4%) in the four days for a relative price change of -3.5%. The fall was exacerbated by a cumulative 4-day volume of 1.2 times the average 4-day volume of 642,125 shares. The stock is now testing its 341-day low of EUR45.94.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, Oversold/Bullish/Support Signals, High Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Technicals, Moving Annual Return, Beta & Alpha, Turnover Rate & Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 LUXOTTICA GROUP BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2%, divided by average yield of dividend yielding stocks in the FTSE MIB Index of 2.5% is 81.6%. This suggests the stock is overvalued in dividend yield terms.

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 2.2. Compared with the rest of the market the stock is overvalued and ranks in the bottom 9% of stocks by value of Q Ratio.

1.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 25.9 [6.2].

1.3 Technicals:

+ The price dropped 2.7% in the last week.

+ Compared with the FTSE MIB Index which fell 0.2% for the week, this represented a relative price decrease for Luxottica Group stock of 2.5% for the week.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 46.94 minus the 26-day EMA of 47.42 is negative 0.48 suggesting a bearish signal. Both EMA prices are falling, another bearish signal.

+ Falls to Rises: in the past month the number of falls outnumbered rises 13:8 or 1.6:1.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
EPS Growth %6In Bottom Quartile
Price to Sales2.1In Bottom Quartile

SECTION 2 LUXOTTICA GROUP BULLISH SIGNALS

2.1 Fundamentals:

+ Economic Value Added defined by Net Operating Profit After Tax of EUR877.7 million less Cost of Capital of EUR334.9 million was EUR542.8 million. The multiple EVA/Cost of Capital was exemplary at 1.6 times.

+ Total Liabilities/EBITDA of 3.2 is comfortably below the Joseph Piotroski benchmark of 5.

+ Interest cover defined by EBIT/I is 17.2 times. This indicates it is less leveraged.

+ Net profit margin has averaged 9% in the last 3 years. This is better than the sector average of 1.3% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity of 14.8% is better than sector average of 10.0%. This is computed as net profit margin of 9.4% times asset turnover [sales/assets] of 1.0 times leverage factor [total assets/shareholders' equity] of 1.8.

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 14.8% [10.0%].

+ Return on Assets 8.3% [1.2%].

+ Return on Capital Employed 17.3% [13.3%].

+ Dividend yield of 2% [0.5%].

2.3 Technicals:

+ The present value of EUR1,000 (PV1000) invested one year ago in Luxottica Group is EUR1,140, comprising a capital gain of EUR121 and dividend reinvested of EUR19.

PV10001-week1-month1-year
LUX.MI9739471,140
FTSE MIB Index9981,0021,352

+ The present value of EUR1,000 (PV1000) invested ten years ago in Luxottica Group is EUR2,380, including a capital gain of EUR1,126 and dividend reinvested of EUR254.

+ 10 years Multiplier in EUR = 2.38x

+ Compound Annual Growth Rate (CAGR) in EUR = 9.1%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in Luxottica Group is $US1,980, including a capital gain of $US769 and dividend reinvested of $US211.

+ 10 years ago EUR 1 equalled USD 1.4186

+ 10 years Multiplier in USD = 1.98x

+ Compound Annual Growth Rate (CAGR) in USD = 7.1%

Oct 16, 2017: EUR 1 equals USD 1.18

2.4 Oversold/Bullish/Support Signals:

+ At EUR45.94 the price is below the lower Bollinger band support of EUR46.05, indicating an upside for it to return to the band.

2.5 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverEUR31.2 million (US$36.8 million)In Top 5%
Return on Assets [ROA] %8.3In Top Quartile
Interest Cover17.2In Top Quartile
Return on Capital Employed [ROCE] %17.3In Top Quartile
Volatility %1.1In Top Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 678,560 shares worth EUR31.2 million (US$36.8 million) traded today. In the past week, volume was 1.1 times average and the shares were down 2.7%. The fall was exacerbated by average volume of 1.1 times the average daily volume of 642,125 shares.

+ Luxottica Group is at a discount of 17.9% to its 12-month high of EUR55.94 on January 16. It is also at a premium of 13.6% to the 12-month low of EUR40.44 on October 17, 2016.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 of the last 5 years. An investment a year ago in LUX would have produced a return of 14.3%.

LUXClose (EUR)Dividends (EUR)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 1645.940.9212.12.214.3
1 Yr ago40.990.89(31.9)1.5(30.4)
2 Yrs ago60.21.4471.44.175.5
3 Yrs ago35.130.65(1.9)1.8(0.1)
4 Yrs ago35.810.5837.42.239.7

Close 5 years ago EUR26.06

3.3 Beta & Alpha:

+ Beta: the Beta of Luxottica Group stock is 0.1. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

+ Alpha: the Alpha of the stock is 7.7. The actual return of 13.87% exceeded the expected return of 6.1%, reflecting outperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 38.7% (or a turnover period of 2 years 6 months). This average length of ownership of the stock at 2.8 times the average holding period of 11 months for stocks in the FTSE MIB Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 4 RANKING

4.1 Global Rank [out of 47,795 stocks] and Rank in the Europe Region [out of 8,436 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)26.3B554156
Total Assets (US$)12.2B2,387490
Revenue (US$)12.3B1,107275
Net Profit (US$)1B986215
Return on Equity %14.87,5571,536
Net Profit Margin %9.411,8611,918
Price to Book52.132,8215,381
Price/Earnings26.114,5072,754
Yield %2.011,7632,275
PV$1000 (1Year) US$*1,22015,3603,307
US$* Change (1Year) %22.315,0263,275

* 1 year ago EUR 1 = USD 1.1

Oct 16, 2017: EUR 1 equals USD 1.18

4.2 Independent Ratings

Luxottica Group is the 314th largest by revenue in the FT Global 500.

It was ranked 444 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016.

It is the 943rd largest by revenue in the Forbes Global 2000.

It is placed 225/283 in BSS News Bites' ranking of Italian performers in the past year, a percentile ranking of 21.

SECTION 5 LUXOTTICA GROUP FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)12.412.19.1
Pretax (USD B)1.61.51.3
Net (USD)1B952.3M761M
EPS (EUR)1.771.671.34

Net profit was up 5.8% from US$952.3 million in 2015 to US$1 billion in 2016. Earnings Per Share (EPS) was up 6% from EUR1.67 to EUR1.77.

5.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Net profit up 5.8% from EUR804.1m ($US877.1m) to EUR850.5m ($US897.1m)

+ Total revenue up 2.2% from EUR10.2b ($US11.2b) to EUR10.4b ($US11.0b).

+ EPS up 6% from EUR1.67 ($US1.82) to EUR1.77 ($US1.87).

+ Interest cover up 32% from 13.0 to 17.2.

+ Administration expenses to Sales down from 12.3% to 10.6%.

+ Sales and marketing expenses to Sales down from 8.6% to 8.1%.

+ Fixed Assets to Total Assets up from 14.9% to 16.2%.

+ Current Debtors to Total Assets up from 8.9% to 9.1%.

+ Total Liabilities to EBITDA of 3.2 compares favourably with the Joseph Piotroski benchmark of <5. However, it has deteriorated by 5.2% from the previous year's ratio of 3.1.

+ Total Liabilities to Operating Cash Flow of 3.4 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 2.5% from the previous year's ratio of 3.5.

+ Net tangible assets per share up 16.9% from EUR0.77 (US84.5c) to EUR0.9 (US94.4c).

Unfavourable Changes:

+ EBIT to total assets down from 14.3% to 13.6%.

+ Total revenue to total assets down from 1.1 to 1.0.

+ Cost of Goods Sold to Sales up from 32.1% to 34.7%.

+ Current ratio down 7.4% from 1.5 to 1.4.

+ Working capital to total assets down from 9.6% to 7.9%.

Note:

+ EBIT Margin steady at 15.4%.

+ Total non-current assets to Total Assets down from 70.7% to 70.6%.

+ Intangibles to Total Assets down from 52.2% to 51.9%.

+ Total current assets to Total Assets up from 29.3% to 29.4%.

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (c)
16 Oct 201792
16 Oct 201689
16 Oct 2015144
16 Oct 201465
16 Oct 201358

SECTION 6 LUXOTTICA GROUP PROFILE

6.1 Activities

Luxottica Group is a leader in eyewear having a brand portfolio that includes Ray-Ban, Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Versace, Vogue, Persol, Arnette and REVO.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorConsumer Non-Cyclicals
Business SectorPersonal & Household Products & Services

6.3 Top Management

The chairman is Leonardo Del Vecchio and the chief executive officer is Massimo Vian.

6.4 Issued Capital

Based on 484,940,000 issued shares the market capitalisation is EUR22.3 billion (US$26.3 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

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May 15: Luxottica Group announces dividend

Luxottica Group today announced a cash dividend of 92.0c per share. The ex dividend date is Monday, May 22, 2017 and it is payable on Wednesday, May 24.

March 27: Luxottica Group: Excerpt of the Shareholders' Agreement between Essilor International and Delfin

Milan (Italy), March 27, 2017 - Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX), in accordance with applicable regulations, discloses to the public the excerpt published today on the Italian newspaper "Corriere della Sera" and concerning the provisions amounting to a "Shareholders' Agreement" of the agreement between Essilor International and Delfin already communicated to the public on January 16, 2017.

March 24: Luxottica Group: Board of Directors Report for ordinary meeting of stockholders now publicly available

Milan, March 24, 2017 - Luxottica Group S.p.A. (NYSE: LUX; MTA: LUX), announced today that the Board of Directors Report for the Ordinary Stockholders Meeting to be convened on April 28, 2017 is available to the public at the Company's registered office, on the Company's website www.luxottica.com in the Governance/General Meeting section, and on the "eMarket Storage" platform at www.emarketstorage.com.

March 23: Luxottica Group pleased with the proposed combination of Essilor and Luxottica progressing

Milan (Italy), March 23, 2017 - Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX) today received notice that the Board of Directors of Essilor International (Euronext Paris: EI) approved the signing of the contribution agreements relating to transaction between Essilor International and Delfin.

The decision follows the favorable opinions of the Essilor's employee representative bodies on the proposed combination with Luxottica announced on January 16, 2017, and the support of Valoptec, an organization that brings together most of Essilor's employee shareholders.

March 07: Luxottica Group: By-Laws February 28, 2017

Milan, Italy, March 7, 2017 - Luxottica Group S.p.A. (MTA: LUX; NYSE: LUX) announced that the Company's By-laws, which have been updated with the issued share capital as of February 28, 2017, are available on the Company's website at www.luxottica.com in the Governance/By-Laws section and on the authorized central storage mechanism eMarket Storage available at www.emarketstorage.com.

Contact: +39 02 86334.1

Physical Address: Via Cantu, 2 Milano 20123 MI Italy

State/Province/Country: Italy

Exchange: Borsa Italiana

ISIN: IT0001479374

MI:LUX; BIT:LUX; IM:LUX; LUX.MI

PermID: 4295875513

Source: www.BuySellSignals.com