Key Takeaways:
- Hermès International (RMS) is reinforcing its position as a top-tier global luxury house by deepening its iconic leather goods franchise, expanding high-margin categories like ready-to-wear and accessories, and investing in controlled retail network growth.
- RMS stock could reasonably reach €3,573 per share by December 2029, based on our valuation assumptions.
- This implies a total return of 61.2% from today’s price of €2,217, with an annualized return of 12.7% over the next 4.0 years.
Hermès International (RMS) is strengthening its position as one of the most desirable global luxury brands by pairing timeless craftsmanship with disciplined store expansion and capacity investments that support long-term, scarcity-driven growth.
The house combines leather goods, ready-to-wear, silk and textiles, accessories, watches, and other métiers under a rigorously controlled distribution model, which has supported structurally high margins and resilient demand across cycles.
The company generated revenue of about €15.2 billion for 2024, growing roughly 15% year-over-year at constant exchange rates, while delivering net income of around €4.6 billion and a profit margin near 30.3%, highlighting the strength of its brand and pricing power.
Here’s why Hermès International (RMS) stock could provide solid returns through 2029 as it leverages brand equity, disciplined growth, and strong profitability while maintaining a conservative balance sheet and robust free cash flow generation.
What the Model Says for RMS Stock
We analyzed the potential for Hermès International (RMS) stock using valuation assumptions based on its durable brand strength, high and stable profitability, and continued investment in capacity and retail that support long-term organic growth.
Based on estimates of 7.6% annual revenue growth, 40% operating margins, and a normalized P/E multiple of 47.8x, the model projects RMS stock could rise from €2,217 to €2,767 per share.
That would be a 24.8% total return, or an 11.9% annualized return over the next 2.0 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Hermès International (RMS) stock:
1. Revenue Growth: 7.6%
Hermès recently delivered revenue of about €15.2 billion, growing around 15% year-over-year at constant exchange rates, supported by solid performance across regions and categories and continued momentum in leather goods.
Demand has remained resilient in its core markets, while emerging regions and newer categories contribute incremental growth without diluting brand positioning.
Based on analysts’ consensus estimates and the assumptions embedded in the model images, we used a 7.6% forecast, reflecting Hermès’ ability to sustain above-market organic growth while balancing capacity additions with exclusivity.
2. Operating Margins: 40%
Hermès continues to post very high profitability, with operating margins around 40.5% and net profit margins near 30.3%, supported by pricing power, mix, and operational discipline.
The group’s vertically integrated model and controlled distribution help preserve gross margins above 70%, even as it invests in new workshops and stores.
Based on analysts’ consensus estimates and the guided model outputs, we use 40% operating margins, capturing Hermès’ ability to maintain structurally high profitability while continuing to invest for long-term growth.
3. Exit P/E Multiple: 47.8x
RMS currently trades at a P/E multiple of 47.8x, reflecting both its premium brand positioning and strong track record of compounding earnings over time.
Based on analysts’ consensus estimates, we maintain a 47.8x exit multiple, acknowledging Hermès’ durable competitive advantages, strong balance sheet, and long runway for organic growth.
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What Happens If Things Go Better or Worse?
Different scenarios for RMS stock through 2030 show varied outcomes based on the strength of luxury demand, pricing power, and store and capacity expansion (these are estimates, not guaranteed returns):
- Low Case: Luxury demand normalizes, and macro headwinds weigh on discretionary spending → 6.4% annual returns
- Mid Case: Steady demand, continued pricing power, and disciplined expansion → 12.7% annual returns
- High Case: Stronger-than-expected growth in key categories and regions → 18.5% annual returns
Even in more conservative scenarios, Hermès International (RMS) benefits from its global brand strength, high margins, and robust free cash flow profile, which support ongoing reinvestment and shareholder returns.
See what analysts forecast for Hermès stock over the next 5 years (Free with TIKR) >>>
How Much Upside Does Hermès Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
