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In a challenging time for the luxury market, the Hermès (HESAY) stock hasn't gone anywhere in recent months. But recovery looks entirely likely. The company's H1 2026 results reveal improvement in geographies affected by the US-Iran war and the margins remain very strong too. With the stock's price at over three year lows and its market multiples attractive, I'm reiterating a Buy rating, even as geopolitical uncertainty and sluggish growth in China are concerns.

Hermes delivered accelerating Q2 revenue, a 41% operating margin, and 18% free cash flow growth despite luxury sector headwinds. HESAY trades at ~35x P/E, a 20% discount to its 15-year average, with analyst consensus suggesting 17-20% upside from current levels. Volume growth has returned, especially in Leather Goods, alleviating concerns about new workshop capacity sitting idle.

As luxury groups grapple with weak fashion sales and a ​hit to spending from the Middle East conflict, investors are increasingly focused on one question: who sells enough jewels?