Up 78% in a year, is it too late to buy Lovisa shares?

Lovisa shares nearly tripled over the past 5 years.

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The Lovisa Holdings Ltd (ASX: LOV) share price has skyrocketed, rising 77.63% over the past year and 194.95% over the last 5 years. That's an impressive return to its shareholders, dwarfing the S&P/ASX 200 Index (ASX: XJO) which has risen 5.4% and 16.7% during those time periods.

The affordable jewellery retailer has been restlessly rolling out its stores globally, expanding its presence to 860 stores across more than 40 countries.

Can it continue this impressive growth in its business for its shareholders? Let's see what experts are saying.

Strong 1H FY24 results

In February, the company announced its 1H FY24 financials, showcasing strong growth despite challenges in the broader retail market.

While its comparable store sales were down 4.4%, the rapid store expansion was more than enough to offset the impact, leading to an 18.2% growth in its revenue to $373 million.

Operating income grew 16.3% to $81.6 million, while its net profit after tax (NPAT) was up 12% to $53.5 million.

At the heart of its growth strategy are its rapid store roll-outs. During the 12 months to December 2023, the company added 74 new stores and entered into three new markets, including China and Vietnam.

Lovisa CEO Victor Herero commented:

The company has continued to deliver solid sales and profit growth and invested in the structures to support our steady global expansion. This positions us strongly to move forward with growth in both existing and new markets.

What experts say about Lovisa

Many sing praises of Lovisa's expansion strategy. Tribeca fund manager Jun Bei Liu snatched some Lovisa shares using a brief drop in the share price in early June, citing its strong management team as my colleague Bernd highlighted.

Since then, the company announced the planned departure of its CEO, Victor Herero. Despite this, Bell Potter remained positive on Lovisa shares as it sees the incoming CEO John Cheston, who is the current CEO of Smiggle, as equally impressive.

Morgans is another positive broker on Lovisa. Analysts at Morgans believe the company is well-positioned for long-term growth in light of the retailer's expansion into mainland China in FY24.

How cheap are Lovisa shares?

Looking ahead to the next three years, Lovisa shares are trading at a price-to-earnings ratio of 42x for FY24, 32x for FY25, and 26x for FY26, using earnings estimates by S&P Capital IQ.

These earnings estimates imply the market is expecting the company will grow its earnings-per-share by 33% in FY25 and another 21% in FY26.

The Lovisa share price closed trade on Thursday up 1.8% at $32.73. At this price, the company offers a dividend yield of 2.5%.

Motley Fool contributor Kate Lee has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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