Is lastminute.com (VTX:LMN) Mispriced Amid Strong ROE and Earnings Growth?

The stock of lastminute.com (VTX:LMN) presents a compelling case for contrarian value investors. While the company’s market capitalization has declined by 19.82% year-over-year to €167.9 million [3], its financial fundamentals tell a different story. Lastminute.com’s Return on Equity (ROE) of 26–27.39% [1][3] dwarfs the industry average of 9.1% [1], signaling exceptional capital efficiency. This outperformance is further underscored by its trailing P/E ratio of 13.39 and forward P/E of 9.60 [2], both significantly below the European Hospitality sector’s 18.3x and peer average of 27.1x [4]. Such a valuation gap suggests the market may be underappreciating the company’s ability to generate returns.

The disconnect between valuation and performance is stark. Lastminute.com returned to net profit in 2023 with €7.0 million after three years of losses [1], and its Adjusted EBITDA surged 28% to €39.7 million in the same period [1]. While 2024 revenue dipped slightly to €312.47 million [3], trailing twelve-month revenue growth of 9.20% [3] indicates resilience. However, recent quarterly results show volatility: Q2 2025 EPS fell to €0.12 from €0.71 in Q2 2024, and net income dropped 83% to €1.28 million [1]. This earnings contraction raises questions about sustainability but may also reflect temporary headwinds in a sector poised for long-term growth.

The online travel booking industry is expanding rapidly, projected to grow at a 12.99% CAGR to $1.26 trillion by 2032 [2]. Lastminute.com’s high ROE and disciplined reinvestment—evidenced by its historically high 67% payout ratio, expected to drop to 29% over the next three years [1]—position it to capitalize on this growth. A lower payout ratio could allow the company to reinvest profits into AI-driven personalization or expand its digital-first offerings, aligning with industry trends [5].

Yet, the stock’s declining market cap—from €514.11 million in 2014 to €167.9 million in 2025 [3]—reflects a -9.36% compound annual growth rate, far below the sector’s trajectory. This divergence hints at a potential mispricing. For value investors, the key question is whether the market is overcorrecting for short-term earnings volatility while ignoring the company’s strong ROE and industry tailwinds.

In conclusion, lastminute.com’s valuation metrics and ROE suggest it is undervalued relative to its peers and the broader sector. While recent earnings declines warrant caution, the company’s ability to generate superior returns and its position in a high-growth industry make it a candidate for contrarian investors willing to bet on a re-rating.

Source:
[1] Could The Market Be Wrong About lastminute.com N.V. (VTX ... [https://uk.finance.yahoo.com/news/could-market-wrong-lastminute-com-061635863.html]
[2] 87 Online Travel and Hotel Booking Stats [https://navan.com/blog/online-travel-booking-statistics]
[3] lastminute.com (SWX:LMN) Statistics & Valuation Metrics [https://stockanalysis.com/quote/swx/LMN/statistics/]
[4] lastminute.com (SWX:LMN) Stock Valuation, Peer ... [https://simplywall.st/stocks/ch/consumer-services/vtx-lmn/lastminutecom-shares/valuation]