Business Analysis Research Paper Example | Topics and Well Written Essays - 2000 words

Business Analysis - Research Paper Example This being the case, a proper review and assessment of the financials of Donna Karan ought to start with a review of the LVMH financials (Google, 2012). It is noteworthy that the key competitors listed for Donna Karan International are ANN Inc .and Giorgio Armani (Hoovers, 2012). Most of the other firms that are grouped with Donna Karan, meanwhile, are private firms, including Calvin Klein, Marc Jacobs, Louis Vuitton North America, Roc Apparel Group, and Lands' End Inc. (Google, 2012). As with ANN and Giorgio Armani, given the private nature of the entities, there is a dearth of information relating to their financials (Hoovers, 2012; Google, 2012). The data on LVMH is more comprehensive financially, and it is from the parent firm that we are able to glean insights into the nature of the financials of LVMH, and indirectly Donna Karan, from the financial statements. From the perspective of the parent firm a few players stand out as the real competition, with comparable market capitali zations. LVMH has the most recent valuation of about US 82.73 billion dollars. This compares with its competitors Christian Dior, at US 25.9 billion dollars; TSI Holdings, at US 56.27 billion dollars; and Hermes, at US 30.45 billion dollars. We can see that among the competitors, LMH has the largest market capitalization, and therefore the largest clout among the firms. A look at the movement of the share price of LVMH over the past five years shows that the share price is about 25 percent off the highs it achieved in 2008, but generally the price is on an upward trend from its lowest points in 2009. At the current price/earnings ratio of 18.63, the share price is undervalued in comparison to competition, such as Lancy, with a P/E ratio of 25.7, even as it is overvalued in comparison to Shejiang Semir, with a P/E ratio of 14.63. Given the high P/E ratio of Lancy, one can make the assumption that there are elements in the underlying financials of LVMH/Donna Karan that has resulted in analysts undervaluing the share price to the level that it stands at present, commanding that kind of P/E ratio. The table below details the comparison of top competitors in the space of Donna Karan/LVMH. It is surprising that LVMH is not commanding a higher share price and P/E ratio, given that its EPS is high in comparison to Lancy (Google, 2012b): Valuation Company name Earnings per  share P/E ratio Mkt Cap LVMUY LVMH Moet Henness... 1.78 18.63 82.73B CHDRF CHRISTIAN DIOR S A F 25.90B MMO1V Marimekko Oyj 0.26 55.63 116.82M 002612 Lancy Co Ltd 1.27 25.70 6.55B 3608 TSI Holdings Co Ltd -204.41 56.27B HESAF HERMES INTL SA 30.45B LTAN Le Tanneur & Cie SA -0.13 27.43M DPT S.T. Dupont SA 0.01 64.86 153.22M 002563 Zhejiang Semir Ga... 1.54 14.63 15.13B TAM Etam Developpemen... 1.83 7.89 115.27M 065060 GNCO Co., Ltd. Table Source: Google, 2012b From the growth ratios, meanwhile, one can see that LVMH has been on a growth tear, plowing back money into growing the business, with the att endant advantages that such growth can bring, including economies of scale, and the ability to rapidly expand profits in the future, from a large revenue base (Reuters, 2012)..    Company Industry Sector Sales (MRQ) vs Qtr. 1 Yr. Ago 25.98 13.75 14.56 Sales (TTM) vs TTM 1 Yr. Ago 22.41