Should you buy Samsonite stock? (August 2024)

Summary

Samsonite, a leading luggage brand listed on the Hong Kong Stock Exchange, boasts a market valuation of $3.8 billion and an Enterprise Value of $4.8 billion. With a history of 11% average annual revenue growth and improving net income margins, the company's stock is valued reasonably at under 10 times free cash flow. Samsonite owns three core brands and has a diversified revenue base across Asia, North America, and Europe. The potential for a secondary listing in the US could increase liquidity and valuation. Despite risks such as travel growth slowdown and debt, the company appears to be a stable investment with bullish prospects.

Takeaways

• 🧳 Samsonite is a leading global luggage brand with a market valuation of $3.8 billion, accounting for cash and debt.
• 📈 The company has an Enterprise Value of 4.8 billion, with revenue over the last 12 months at 3.7 billion and net income of 426 million.
• 💹 Samsonite's stock is valued at under nine times earnings and under 10 times free cash flow, suggesting a reasonable valuation.
• 📊 Over the past decade, Samsonite has shown an average annual revenue growth of 11%, including through the pandemic disruption.
• 📈 The company's net income margins and free cash flow margins have steadily improved, with net income margins nearing 12%.
• 🏢 Samsonite was founded in Denver, USA, and has joint headquarters in Massachusetts, owning three core brands: Samsonite, Tumi, and American Tourister.
• 🌏 Revenue is diversified across regions, with Asia at 38%, North America at 34%, and Europe at 21%, and across wholesale and direct-to-consumer segments.
• 🚀 The travel industry's rebound and China's potential for growth offer opportunities for Samsonite, despite not being back to pre-pandemic levels.
• 📊 Management is considering a secondary listing for Samsonite, which could increase liquidity and attract mutual funds and institutional buyers, potentially boosting valuation.
• 💰 Assuming a 5% earnings growth and a PE multiple expansion to 15, the stock could see a 76% upside, based on the current valuation of $3.8 billion.
• ⚠️ Risks include potential slowing travel growth, existing debt, and uncertainty regarding the success and impact of a secondary listing.

Q & A

What is the current market valuation of Samsonite according to the script?

The current market valuation of Samsonite is $3.8 billion USD.

What is Samsonite's Enterprise Value as mentioned in the script?

Samsonite's Enterprise Value is $4.8 billion.

How much revenue did Samsonite generate over the last 12 months?

Samsonite generated $3.7 billion in revenue over the last 12 months.

What is Samsonite's net income for the last 12 months?

Samsonite's net income for the last 12 months is $426 million.

What are Samsonite's adjusted EBITDA and free cash flow figures?

Samsonite's adjusted EBITDA is $714 million, and its free cash flow is $5 million.

How does the script describe Samsonite's valuation in terms of earnings and free cash flow?

The script describes Samsonite's valuation as being under nine times earnings and under 10 times free cash flow.

What has been Samsonite's average annual revenue growth over the past 10 years?

Samsonite's average annual revenue growth over the past 10 years has been around 11%.

What regions contribute to Samsonite's sales, and what are their respective percentages?

Samsonite's sales are diversified across four regions: Asia (38%), North America (34%), Europe (21%), and the rest is unspecified.

What potential future development does the script mention regarding Samsonite's stock listing?

The script mentions that Samsonite is considering pursuing a secondary listing, possibly in Europe or the US, which could increase liquidity and potentially boost the company's valuation.

What is the potential upside in Samsonite's stock if certain conditions are met?

If Samsonite's earnings grow by another 5% next year, and the stock is listed on a US exchange with a PE multiple expanding from 8.9 to 15, the valuation could reach about $6.7 billion, equating to a 76% upside in the stock.