In a previous earnings commentary published in these columns in the summer of 2024 - see L'Oréal: A War Machine - we highlighted that Nicolas Hieronimus' tenure was proving to be a resounding success, despite the challenge of succeeding the charismatic Jean-Paul Agon.

Nevertheless, 2025 marked an unprecedented slowdown in growth for the world leader in beauty, with its weakest performance in ten years: revenue increased by just 1.3%, while operating profit grew only 2.4%.

A well-oiled war machine - or a "Prussian barrack," to use the apt phrase of an analyst who once covered the group - L'Oréal nonetheless delivered its best operating margin of the decade and accelerated both its dividend payouts and the capital deployed for acquisitions.

2026 is off to a strong start, with a clear recovery in sales growth, particularly in China, where all eyes naturally remain focused, and the acquisition of Kering's Beauty Division, which complements the Saint Laurent license already successfully operated by L'Oréal.

Trading at 30x earnings, with a dividend yield of 2.2%, the valuation of the global beauty leader is exactly at its 10-year average - provided one adjusts for the distortion caused by speculative excesses during the pandemic.

The share price is currently at the same level as five years ago, in the midst of the Covid crisis, even though L'Oréal has increased its revenue by 57% and its net income by 72% in between time.

This is because, at that time, the valuation was trading at a completely unreasonable multiple of nearly 60x earnings.