Up 78% in a year, is it too late to buy Lovisa shares?

Lovisa shares nearly tripled over the past 5 years.

| More on:
A young woman's hands are shown close up with many blingy gold rings on her fingers and two large gold chains around her neck with dollar signs on them.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Lovisa Holdings Ltd (ASX: LOV) share price has skyrocketed, rising 77.63% over the past year and 194.95% over the last 5 years. That's an impressive return to its shareholders, dwarfing the S&P/ASX 200 Index (ASX: XJO) which has risen 5.4% and 16.7% during those time periods.

Created with Highcharts 11.4.3Lovisa PriceZoom1M3M6MYTD1Y5Y10YALL20 Jun 201920 Jun 2024Zoom ▾Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '242020202020212021202220222023202320242024www.fool.com.au

The affordable jewellery retailer has been restlessly rolling out its stores globally, expanding its presence to 860 stores across more than 40 countries.

Can it continue this impressive growth in its business for its shareholders? Let's see what experts are saying.

Strong 1H FY24 results

In February, the company announced its 1H FY24 financials, showcasing strong growth despite challenges in the broader retail market.

While its comparable store sales were down 4.4%, the rapid store expansion was more than enough to offset the impact, leading to an 18.2% growth in its revenue to $373 million.

Operating income grew 16.3% to $81.6 million, while its net profit after tax (NPAT) was up 12% to $53.5 million.

At the heart of its growth strategy are its rapid store roll-outs. During the 12 months to December 2023, the company added 74 new stores and entered into three new markets, including China and Vietnam.

Lovisa CEO Victor Herero commented:

The company has continued to deliver solid sales and profit growth and invested in the structures to support our steady global expansion. This positions us strongly to move forward with growth in both existing and new markets.

What experts say about Lovisa

Many sing praises of Lovisa's expansion strategy. Tribeca fund manager Jun Bei Liu snatched some Lovisa shares using a brief drop in the share price in early June, citing its strong management team as my colleague Bernd highlighted.

Since then, the company announced the planned departure of its CEO, Victor Herero. Despite this, Bell Potter remained positive on Lovisa shares as it sees the incoming CEO John Cheston, who is the current CEO of Smiggle, as equally impressive.

Morgans is another positive broker on Lovisa. Analysts at Morgans believe the company is well-positioned for long-term growth in light of the retailer's expansion into mainland China in FY24.

How cheap are Lovisa shares?

Looking ahead to the next three years, Lovisa shares are trading at a price-to-earnings ratio of 42x for FY24, 32x for FY25, and 26x for FY26, using earnings estimates by S&P Capital IQ.

These earnings estimates imply the market is expecting the company will grow its earnings-per-share by 33% in FY25 and another 21% in FY26.

The Lovisa share price closed trade on Thursday up 1.8% at $32.73. At this price, the company offers a dividend yield of 2.5%.

Motley Fool contributor Kate Lee has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

Photo of a happy couple with their new car and car keys.
Consumer Staples & Discretionary Shares

Up 55% this year, why Macquarie believes Eagers Automotive shares can charge higher

Eagers set to capitalise as BYD’s Australian sales surge.

Read more »

Two race cars on a track at sunset.
Consumer Staples & Discretionary Shares

Down 36% in a year, this ASX 300 stock is one to watch

After a major sell-off, this high-performance cooling specialist might be gearing up for a turnaround.

Read more »

Two laughing young women hold shopping bags and ride an escalator up to another level in a Scentre Group shopping centre.
Broker Notes

3 ASX consumer sector shares to buy in July: expert

A leading expert has named its top 3 picks.

Read more »

person with large headphones looking puzzled holding their hand to their chin.
Broker Notes

Does Macquarie prefer Harvey Norman or JB Hi-Fi shares?

Both companies have market-beating long-term track records.

Read more »

Person taking out a slice of pizza from a pizza box.
Consumer Staples & Discretionary Shares

Why now is the time to buy the big dip on Domino's shares

Down 46% in a year, a leading expert forecasts brighter days ahead for Domino’s shares.

Read more »

Three people sit on safe cheering with pizza on table
Consumer Staples & Discretionary Shares

Food fight! Have Guzman Y Gomez shares outperformed Domino's since ASX debut?

Lets find out who’s topping the menu for investors

Read more »

Woman chooses vegetables for dinner, smiling and looking at camera.
Consumer Staples & Discretionary Shares

Here's the Coles dividend forecast from top analysts through to 2029

Can this defensive business provide pleasing payouts? Let’s take a look…

Read more »