Three Top Brands. Three Deep Drops. Are Nike, LVMH, and Disney Ready to Bounce Back?
Nike, Disney, and LVMH are world-class brands, but their stock prices have taken a beating in recent years. Is this temporary turbulence or a long-term warning sign? We analyze these giants through a Buffett-style lens.
Even the strongest brands can go through rough patches. Here's why these three might be poised for a comeback.
The Damage: How Far Have They Fallen?
| Company | Ticker | Peak Price | Current Price | % Drop |
|---|---|---|---|---|
| Nike | NKE | $177.51 (2021) | ~$52.28 | ~70% |
| LVMH | LVMUY | $174.69 (2024) | ~$110.60 | ~37% |
| Disney | DIS | $201.91 (2021) | ~$85.63 | ~58% |
Buffett-Style Recovery Analysis
Nike (NKE)
What’s Wrong: China weakness, margin pressure, elevated inventory.
What’s Right: Deep global brand, DTC growth, innovation in footwear and apparel.
FCF & Debt: Healthy, but recent margin dips affecting cash conversion.
Recovery Outlook: Moderate to High
Needs demand normalization and cost control. Olympics and sporting events could help.
LVMH (LVMUY)
What’s Wrong: Softness in China and luxury fatigue post-pandemic.
What’s Right: Arguably the best luxury portfolio in the world — Louis Vuitton, Dior, Hennessy, and more.
FCF & Debt: Exceptionally strong and steady; little debt concern.
Valuation:
- Trading at ~19× earnings, below its 5-year average of ~25×.
- PEG ratio is under 2 — attractive for a luxury compounder.
- Compared to Hermès (~45× P/E), LVMH appears undervalued.
Recovery Outlook: High
The best positioned of the three. Likely to outperform over 3–5 years.
Disney (DIS)
What’s Wrong: Streaming wars, cord-cutting, debt from FOX acquisition.
What’s Right: Unique intellectual property (Marvel, Pixar), booming parks, ESPN potential.
FCF & Debt:
- Free Cash Flow (2024 TTM): $8.4B and growing.
- Debt: $45.8B, but with strong interest coverage (~9x) and improving cash flows.
Recovery Outlook: Moderate to High
Parks are booming, streaming is stabilizing, and dividend is back. If it stays disciplined, Disney could reclaim glory.
Final Verdict: Buy the Moat, Trust the Cash
| Brand | Buffett Would... | Current Price vs Value | 3-Year Upside Potential |
|---|---|---|---|
| Nike | Buy Slowly | Undervalued | 40–60% |
| LVMH | Accumulate | Undervalued | 30–50% |
| Disney | Buy on Dips | Undervalued | 50–70% |
These are not broken businesses — just temporarily out of favor. As Buffett reminds us, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
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