Google Glass has received a lot of attention as a futuristic wearable device, but it has not caught on with the masses. Now Google GOOG is trying to correct that by signing up eyewear giant Luxottica. Consumers are likely familiar with one of the Italian company’s many brands, such as Ray-Ban, Sunglass Hut, LensCrafters and Oakley. Last month, Luxottica bought glasses.com from health insurance giant WellPoint. But does this move make Luxottica a buy right now?
Luxottica LUX will be in charge of wholesale and retail sales and will also manufacture Google Glass frames. Luxottica stock has moved up on the news of the partnership, but our algorithms at The Arora Report show that the smart money is selling aggressively into the strength.
Let us examine the change that is happening in Luxottica’s business. This video from CBS’s ” 60 Minutes ” provides some background. CBS claims that many glasses are sold by Luxottica for 20 times what it cost them. This is consistent with the information I have independently gathered from industry sources.
It is important to note that Luxottica is an expensive stock that trades at a P/E of 36 when analyzed in the context of new competitive pressures, Luxottica is likely to face in the future. Forward P/E (FYE 2015) is 24 based on the consensus of published estimates.
In my view, the consensus 2015 earnings estimate for Luxottica is too high because the high margins that Luxottica enjoys are coming under pressure from a number of startups, such as Warby Parker…Read more at MarketWatch
