Lovisa Holdings Limited (ASX:LOV) Shares Could Be 31% Below Their Intrinsic Value Estimate

Simply Wall St.

Jan 07

AdvertisementKey Insights Using the 2 Stage Free Cash Flow to Equity, Lovisa Holdings fair value estimate is AU$41.00 Current share price of AU$28.11 suggests Lovisa Holdings is potentially 31% ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Most Discussed

{"basename":"","ssrTDKData":{"titleTemplate":"%s - Tiger Brokers","title":"Tiger Brokers | Global Stocks, Options & Futures Trading App","description":"Tiger Brokers, one-stop investment in US stocks, SGX stocks, HK stocks, A-shares & other global assets. One of the best stock trading platforms in Singapore.","keywords":"tiger brokers,tiger trade,tiger brokers singapore,broker online,stock trading in singapore,share trading singapore,brokerage firm singapore,trading app,stock broker singapore,stock trading platforms,trading account","social":{"ogDescription":"Tiger Brokers, one-stop investment in US stocks, SGX stocks, HK stocks, A-shares & other global assets. One of the best stock trading platforms in Singapore.","ogImage":"https://c1.itigergrowtha.com/portal5/static/media/og-logo.be62fbe1.png","ogUrl":"https://www.itiger.com/news/2601646824"},"companyName":"Tiger Brokers"},"pageData":{"isMobile":false,"isTiger":false,"isTTM":true,"region":"SGP","license":"TBSG","edition":"fundamental"},"isCrawlerRequest":true,"__swrFallback__":{"@#url:\"https://stock-news.skytigris.cn/v3/news\",params:#id:\"2601646824\",edition:\"fundamental\",auth_exemption:1,,,undefined,":{"share":"https://ttm.financial/m/news/2601646824?lang=en_US&edition=fundamental","thumbnail":"https://images.simplywall.st/asset/industry/4444000-choice2-main-header/1585186827172","is_english":true,"pubTime":"2026-01-07 08:51","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2601646824","market":"sg","top_or_hot":-1,"title":"Lovisa Holdings Limited (ASX:LOV) Shares Could Be 31% Below Their Intrinsic Value Estimate","media":"Simply Wall St.","content":"<div>\n<p>AdvertisementKey Insights Using the 2 Stage Free Cash Flow to Equity, Lovisa Holdings fair value estimate is AU$41.00   Current share price of AU$28.11 suggests Lovisa Holdings is potentially 31% ...</p>\n\n<a href=\"https://simplywall.st/stocks/au/retail/asx-lov/lovisa-holdings-shares/news/lovisa-holdings-limited-asxlov-shares-could-be-31-below-thei\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Lovisa Holdings Limited (ASX:LOV) Shares Could Be 31% Below Their Intrinsic Value Estimate</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nLovisa Holdings Limited (ASX:LOV) Shares Could Be 31% Below Their Intrinsic Value Estimate\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-01-07 08:51 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/au/retail/asx-lov/lovisa-holdings-shares/news/lovisa-holdings-limited-asxlov-shares-could-be-31-below-thei><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>AdvertisementKey Insights Using the 2 Stage Free Cash Flow to Equity, Lovisa Holdings fair value estimate is AU$41.00   Current share price of AU$28.11 suggests Lovisa Holdings is potentially 31% ...</p>\n\n<a href=\"https://simplywall.st/stocks/au/retail/asx-lov/lovisa-holdings-shares/news/lovisa-holdings-limited-asxlov-shares-could-be-31-below-thei\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"TV","symbol_name":"墨西哥电视","start_time":0,"source_url":"https://simplywall.st/stocks/au/retail/asx-lov/lovisa-holdings-shares/news/lovisa-holdings-limited-asxlov-shares-could-be-31-below-thei","article_id":"2601646824","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/4444000-choice2-main-header/1585186827172"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/au/retail/asx-lov/lovisa-holdings-shares/news/lovisa-holdings-limited-asxlov-shares-could-be-31-below-thei","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2601646824","pubTimestamp":1767747094,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Key Insights Using the 2 Stage Free Cash Flow to Equity, Lovisa Holdings fair value estimate is AU$41.00 Current share...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"TV":"墨西哥电视","BK7128":"专卖店","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","FCF":"第一联邦金融","LOV":"Spark Networks","BK4100":"有线和卫星","LOV.AU":"LOVISA HOLDINGS LTD","BK4077":"互动媒体与服务","BK4211":"区域性银行"},"translate_title":"Lovisa Holdings Limited(ASX：LOV)股价可能比其内在价值预期低31%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"FCF":1,"TV":1,"LOV.AU":1.5,"LOV":1.5},"content_text":"AdvertisementKey Insights Using the 2 Stage Free Cash Flow to Equity, Lovisa Holdings fair value estimate is AU$41.00   Current share price of AU$28.11 suggests Lovisa Holdings is potentially 31% undervalued   Our fair value estimate is 21% higher than Lovisa Holdings' analyst price target of AU$33.98   Does the January share price for Lovisa Holdings Limited (ASX:LOV) reflect what it's really worth? Today, we will estimate the stock's intrinsic value  by taking the expected future cash flows and discounting them to today's value.  We will take advantage of the Discounted Cash Flow (DCF) model for this purpose.  Don't get put off by the jargon, the math behind it is actually quite straightforward.  We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios.  For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. The Calculation   We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period.  To begin with, we have to get estimates of the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.   A DCF is all about the idea that a dollar in the future is less valuable than a dollar today,  so we discount the value of these future cash flows to their estimated value in today's dollars:  10-year free cash flow (FCF) estimate  2026202720282029203020312032203320342035 Levered FCF (A$, Millions) AU$158.8mAU$182.5mAU$209.9mAU$230.8mAU$249.2mAU$265.5mAU$280.3mAU$294.1mAU$307.1mAU$319.6mGrowth Rate Estimate SourceAnalyst x4Analyst x4Analyst x4Est @ 9.96%Est @ 7.96%Est @ 6.56%Est @ 5.58%Est @ 4.90%Est @ 4.42%Est @ 4.08% Present Value (A$, Millions) Discounted @ 8.3% AU$147AU$156AU$165AU$168AU$167AU$164AU$160AU$155AU$150AU$144(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$1.6b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.3%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$320m× (1 + 3.3%) ÷ (8.3%– 3.3%) = AU$6.6bPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$6.6b÷ ( 1 + 8.3%)10= AU$3.0b The total value, or equity value, is then the sum of the present value of the future cash flows,  which in this case is AU$4.5b.  The last step is to then divide the equity value by the number of shares outstanding.  Relative to the current share price of AU$28.1, the company appears   quite undervalued    at a 31% discount to where the stock price trades currently.   Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. ASX:LOV Discounted Cash Flow January 7th 2026  Important Assumptions  The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows.  If you don't agree with these result, have a go at the calculation yourself and play with the assumptions.  The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance.  Given that we are looking at Lovisa Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt.  In this calculation we've used 8.3%, which is based on a levered beta of 1.191. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.   See our latest analysis for Lovisa Holdings SWOT Analysis for Lovisa HoldingsStrength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Balance sheet summary for LOV. Weakness Earnings growth over the past year is below its 5-year average. Dividend is low compared to the top 25% of dividend payers in the Specialty Retail market.Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by earnings. Revenue is forecast to grow slower than 20% per year.  See LOV's dividend history.  Looking Ahead:  Valuation is only one side of the coin in terms of building your investment thesis, and it  ideally won't be the sole piece of analysis you scrutinize for a company.  It's not possible to obtain a foolproof valuation with a DCF model.  Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued.  If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different.   Can we work out why the company is trading at a discount to intrinsic value?   For Lovisa Holdings, we've compiled three  relevant  aspects  you should consider:   Risks: Consider for instance, the ever-present spectre of investment risk.   We've identified 1 warning sign  with Lovisa Holdings , and understanding it should be part of your investment process.  Future Earnings: How does LOV's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!   PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}