Should you buy Samsonite stock? (August 2024)

3-Minute Breakdowns

7 Aug 202403:16

Summary

TLDRSamsonite, 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.

Outlines

00:00

🧳 Samsonite: A Leading Luggage Brand with Growth Potential

Samsonite, a renowned luggage brand listed on the Hong Kong Stock Exchange, has a market valuation of $3.8 billion, with an Enterprise Value of 4.8 billion. The company has shown resilience with an average annual revenue growth of 11% over the past decade, even amidst pandemic disruptions. With net income margins nearing 12% and a diversified revenue stream across Asia, North America, and Europe, Samsonite appears to be a stable and globally recognized business. The company's core brands include Samsonite, Tumi, and American Tourister, catering to a broad consumer base. Despite the travel industry's rebound, opportunities for growth remain, especially in Asia where China's travel sector has yet to return to pre-pandemic levels. Samsonite's management has indicated a pursuit of a secondary listing, which could enhance the company's valuation by increasing liquidity and attracting institutional investors. Assuming a 5% earnings growth and a potential listing on a US stock exchange, the company's valuation could rise significantly, offering investors substantial upside.

Mindmap

Keywords

💡Global Travel Stock

A 'Global Travel Stock' refers to a company's publicly traded shares that are involved in the travel industry on an international scale. In the video, Samsonite is highlighted as a global travel stock to watch, indicating its importance and potential in the market. The company's performance and valuation are discussed in the context of its role in the travel sector.

💡Market Valuation

Market Valuation is the total value of a company's shares as determined by the stock market. The script mentions Samsonite's market valuation as $3.8 billion, which is a key metric for investors to assess the company's size and potential investment value.

💡Enterprise Value

Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to market capitalization. It includes the company's market capitalization, debt, cash, and other factors. In the script, Samsonite's Enterprise Value is stated as 4.8 billion, which provides insight into the company's overall value including its financial obligations.

💡Revenue

Revenue refers to the total income generated from a company's operations during a specific period. The video script reports Samsonite's revenue over the last 12 months as 3.7 billion, illustrating the company's financial performance and scale of operations.

💡Net Income

Net Income, also known as net profit, is the amount of earnings left after all expenses have been deducted from revenue. The script mentions Samsonite's net income as 426 million, which is a critical indicator of the company's profitability.

💡Adjusted EBITDA

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial performance measure that excludes certain non-cash expenses and one-time items. The script states Samsonite's adjusted EBITDA as 714 million, reflecting the company's operational profitability on an adjusted basis.

💡Free Cash Flow

Free Cash Flow is the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. The script mentions Samsonite's free cash flow as 5 million, indicating the company's ability to generate cash that can be used for growth or returned to shareholders.

💡Valuation Multiples

Valuation Multiples are ratios used to determine a company's value relative to its earnings or cash flow. The video discusses Samsonite's stock being valued at under nine times earnings and under 10 times free cash flow, suggesting that the stock may be undervalued compared to its financial performance.

💡Growth Prospects

Growth Prospects refer to the potential for a company's future expansion and increased profitability. The script highlights Samsonite's reasonable growth prospects, particularly in Asia, as the travel industry rebounds post-pandemic, indicating the company's potential for future success.

💡Secondary Listing

A Secondary Listing is when a company's shares are listed on an additional stock exchange, beyond its primary market. The script discusses Samsonite's potential secondary listing in Europe or the US, which could increase liquidity and attract more investors, thereby potentially increasing the company's valuation.

💡Bullish Rating

A 'Bullish Rating' is an investment analyst's positive outlook on a stock, expecting its price to rise. The script concludes with a bullish rating for Samsonite stock, based on the company's financial performance, growth prospects, and potential benefits from a secondary listing.

Highlights

Samsonite is a leading luggage brand listed on the Hong Kong Stock Exchange.

The company's market valuation is $3.8 billion, with an Enterprise Value of $4.8 billion.

Samsonite's revenue over the last 12 months is $3.7 billion, with a net income of $426 million.

Adjusted EBITDA stands at $714 million, and free cash flow is $5 million.

Samsonite stock is valued at under nine times earnings and under ten times free cash flow.

The company has averaged annual revenue growth of 11% over the past 10 years.

Net income margins are now approaching 12%, showing steady improvement over time.

Despite being listed in Hong Kong, Samsonite was founded in Denver, USA, and has a joint headquarters in Massachusetts.

Samsonite owns three core brands: Samsonite, Tumi, and American Tourister.

Revenue is diversified across four regions: Asia (38%), North America (34%), and Europe (21%).

The company's sales are spread across different segments: wholesale and direct-to-consumer.

China's travel industry hasn't yet returned to pre-pandemic levels, offering potential growth opportunities.

Management is pursuing a secondary listing for Samsonite shares, which could unlock additional value.

A potential US Stock Exchange listing could increase liquidity and attract mutual funds and institutional buyers.

With a 5% earnings growth projection and PE multiple expansion to 15, the valuation could reach $6.7 billion, equating to 76% upside.