L'Oréal shares have recently benefitted from renewed interest and are reverting to attractive levels at which sales could be contemplated.
Summary
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Strengths
● The company returns high margins, thereby supporting business profitability.
● Thanks to a sound financial situation, the firm has significant leeway for investment.
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Weaknesses
● The company's valuation in terms of earnings multiples is rather high. Indeed, the firm is getting paid 48.67 times its estimated earnings per share for the ongoing year.
● The company's "enterprise value to sales" ratio is among the highest in the world.
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● The firm pays small or no dividend to shareholders. For that reason, it is not a yield company.
● The three month average target prices set by analysts do not offer high potential in comparison with the current prices.
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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%).