Shares in L'Oréal do not show any sign of a slowdown in the ascending dynamic. Investors could bet on a continuation of the underlying trend.
Summary
● The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
● According to Refinitiv, the company's ESG score for its industry is good.
Strengths
● The group's high margin levels account for strong profits.
● Thanks to a sound financial situation, the firm has significant leeway for investment.
● Sales forecast by analysts have been recently revised upwards.
● Over the past four months, analysts' average price target has been revised upwards significantly.
● Considering the small differences between the analysts' various estimates, the group's business visibility is good.
Weaknesses
● With an expected P/E ratio at 49.42 and 43.1 respectively for both the current and next fiscal years, the company operates with high earnings multiples.
● The company's "enterprise value to sales" ratio is among the highest in the world.
● In relation to the value of its tangible assets, the company's valuation appears relatively high.
● The valuation of the company is particularly high given the cash flows generated by its activity.
● The firm pays small or no dividend to shareholders. For that reason, it is not a yield company.
● The price targets of various analysts who make up the consensus differ significantly. This reflects different assessments and/or a difficulty in valuing the company.
L'Oréal is the world leading cosmetic group. The group offers skincare products (39.9% of sales), makeup products (19.7%), haircare products (15.4%), fragrances (12.6%), hair colouring products (8.3%) and other (4,1%). Net sales break down by family of products as follows:
- consumer cosmetics (36.9%): L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie Niely, Dark and Lovely, Mixa, MG and Carol's Daughter brands;
- luxury cosmetics (36.2%): Lancôme, Kiehl's, Giorgio Armani Beauty, Yves Saint Laurent Beauté, Biotherm, Helena Rubinstein, Shu Uemura, IT Cosmetics, Urban Decay, Ralph Lauren, Mugler, Viktor&Rolf, Valentino, Azzaro, Prada, Takami, A?sop, etc.;
- active cosmetics (15,6%): La Roche-Posay, Vichy, CeraVe, SkinCeuticals, Skinbetter Science, etc.;
- professional products (11,3%): L'Oréal Professionnel, Kérastase, Redken, Matrix and PureOlogy brands.
Products are marketed through mass distribution and distance selling, selective distribution, hair salons and pharmacies.
At the end of 2023, L'Oréal has 37 production sites worldwide.
Net sales are distributed geographically as follows: Europe (31.6%), North America (27%), North Asia (25.9%), Asia/Pacific/Middle East/Africa (8.4%) and Latin America (7.1%).
L'ORÉAL 
