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L'Oreal SA OR

Morningstar Rating
€441.70 −4.85 (1.09%)
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Company Report

L’Oréal Earnings: Derma Skincare Shines, but Growth Hampered by Weak Travel Retail and China Demand

We don’t plan any material changes to our EUR 388 fair value estimate after absorbing wide-moat beauty maker L’Oréal’s 2023 results that slightly missed our forecasts. We think L’Oréal remains well positioned in both premium and mass beauty for the long term thanks to a strong brand portfolio and tight channel partnerships globally. In particular, we expect its derma skincare and high-end fragrances to continue fueling sales expansion thanks to strong product efficacy and expanding distribution. We are maintaining our 10-year projections for high-single-digit sales CAGR and a 20% average operating margin. Shares remain overvalued after an 8% fall on the report.

Price vs Fair Value

OR is trading at a 15% premium.
Price
€446.55
Fair Value
€859.00
Uncertainty
Medium
1-Star Price
€338.20
5-Star Price
€852.70
Economic Moat
Jqx
Capital Allocation
Mrkbwqrskr

Bulls Say, Bears Say

Bulls

L’Oreal is poised to capture structural growth opportunities in the beauty market thanks to its well-balanced category exposure and strong positions across brick-and-mortar and digital channels.

Bears

As the largest beauty company globally, L’Oreal is susceptible to factors such as macroeconomic headwinds and geopolitical tension that could pressure consumers’ desire and purchasing power for beauty products.

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News

Trading Information

Previous Close Price
€446.55
Day Range
€440.25448.10
52-Week Range
€365.80460.60
Bid/Ask
€440.50 / €445.00
Market Cap
€236.19 Bil
Volume/Avg
617,052 / 285,764

Key Statistics

Price/Earnings (Normalized)
38.34
Price/Sales
5.93
Dividend Yield (Trailing)
1.34%
Dividend Yield (Forward)
1.48%
Total Yield
1.34%

Company Profile

Founded in 1909, L’Oreal has grown into the largest beauty company in the world, participating in categories including skincare (40% of 2022 sales), makeup (20%), haircare (27%), fragrance (9%), and sanitary products (4%). The firm also has a diversified geographic footprint, generating 32% of sales in its home market of Western Europe, 25% from North America, 19% in North Asia, and the rest from various emerging markets across South Asia, Latin America, and Africa. L’Oreal owns a mix of premium and mass beauty brands sold through a wide range of channels such as mass retail, drugstores, department stores, travel retail, e-commerce, hair salons, and medi-spas. Leading brands include Lancome, Yves Saint Laurent, Maybelline, Kiehl’s, L’Oreal Paris, Kerastase, CeraVe, Garnier, and Armani.
Sector
Consumer Defensive
Industry
Household & Personal Products
Stock Style Box
Large Growth
Total Number of Employees
90,000

Competitors

Valuation

Metric
OR
4911
EL
Price/Earnings (Normalized)
38.3452.3596.15
Price/Book Value
8.562.629.25
Price/Sales
5.931.603.51
Price/Cash Flow
30.6015.2439.90
Price/Earnings
OR
4911
EL

Financial Strength

Metric
OR
4911
EL
Quick Ratio
0.620.770.87
Current Ratio
1.031.291.36
Interest Coverage
54.305.462.79
Quick Ratio
OR
4911
EL

Profitability

Metric
OR
4911
EL
Return on Assets (Normalized)
13.26%2.58%3.09%
Return on Equity (Normalized)
23.75%5.47%12.28%
Return on Invested Capital (Normalized)
17.58%3.91%5.04%
Return on Assets
OR
4911
EL
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