The recent downside mouvement appears to lose momentum which could allow L'Oréal shares to regain a positive medium term outlook.
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.
● The company is in a robust financial situation considering its net cash and margin position.
● Over the last twelve months, the sales forecast has been frequently revised upwards.
● Predictions on business development from analysts polled by Standard & Poor's are tight. This results from either a good visibility into core activities or accurate earnings releases.
Weaknesses
● With an expected P/E ratio at 35.04 and 32.51 respectively for both the current and next fiscal years, the company operates with high earnings multiples.
● 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 
