The S&P/ASX 200 Index (ASX: XJO) stock Lovisa Holdings Ltd (ASX: LOV) has just received a major vote of confidence from its current CEO through a share investment.
It can be a pleasing sign when a member of a leadership team buys their company's shares on the market. This suggests that the person believes in the business's long-term potential and is attracted to the valuation.
Despite Lovisa CEO Victor Herrero intending to leave the business in May 2025, he recently invested in some Lovisa shares. He may have seen a buying opportunity with the company following a 22% share price drop from 23 August.
Let's look at how much of the ASX 200 stock he decided to buy and at what price.
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CEO buys Lovisa shares
Lovisa advised today that Victor Herrero has bought another 10,200 Lovisa shares to boost his holdings.
He bought the shares at a price of $29.48, bringing the total investment to approximately $300,000.
This investment brought his total holding to approximately 3.09 million shares, which is worth just over $90 million.
Herrero is financially aligned with the success of the business, meaning when regular Lovisa shareholders succeed, so does Herrero.
Is this a buying opportunity for the ASX 200 stock?
I think it's a good idea to look at growing businesses where the share price is lower because it suggests investors will get better value with a cheaper price/earnings (P/E) ratio.
Lovisa is growing its affordable jewellery store network globally, which is supporting sales growth.
In its AGM update, the company advised that its total sales were up 10% in the first 20 weeks of FY25, and global comparable store sales were up 1% year over year.
Lovisa also revealed that it had opened 27 net new stores for the 2025 financial year to date, comprising a mix of 40 new stores and 13 closures. This includes two relating to the conversion of its UAE franchise business to company-owned and two relocations.
At the time of the AGM, it had 927 stores across 49 markets, with three new franchise markets opened in the year to date: Ivory Coast, Republic of Congo, and Panama. Compared to November 2023, it had 91 more stores and was operating in nine additional markets.
According to the Commsec forecast, the ASX 200 stock is projected to generate 84.9 cents of earnings per share (EPS). This puts the Lovisa share price at 34x FY25's estimated earnings, and it could pay a partially franked dividend yield of 2.6%.
I think now could be a long-term opportunity with the compelling company, though I expect it may see plenty of volatility over the years as a retail business. I've been considering a top-up investment during this period.
