After having been stuck in a trading range, shares in L'Oréal are returning to the lower bound of the range phase. This appears to be a good opportunity for opening new positions.
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 company returns high margins, thereby supporting business profitability.
● The company is in a robust financial situation considering its net cash and margin position.
● Considering the small differences between the analysts' various estimates, the group's business visibility is good.
Weaknesses
● The company's valuation in terms of earnings multiples is rather high. Indeed, the firm is getting paid 34.47 times its estimated earnings per share for the ongoing year.
● Based on current prices, the company has particularly high valuation levels.
● In relation to the value of its tangible assets, the company's valuation appears relatively high.
● The company is highly valued given the cash flows generated by its activity.
● The company is not the most generous with respect to shareholders' compensation.
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 
