L'Oréal OR.PA
What does L'Oréal do?
L'Oréal is the world's largest cosmetics group, headquartered in France. The company develops, manufactures and sells products for skin care, make-up, hair care, hair color and perfume for women and men. The business is divided into four divisions: Professional Products (hair salons), Consumer Products (mass market), Luxe (prestige products) and Dermatological Beauty (dermatologist-recommended care).
Sales are generated through drugstores, supermarkets, department stores, perfumeries, hair salons and pharmacies, as well as increasingly through online retail and the company's own channels. The brand portfolio ranges from mass-market brands such as L'Oréal Paris, Garnier and Maybelline New York, through salon brands such as Kérastase, to luxury brands such as Lancôme, Yves Saint Laurent Beauté and Armani Beauty, complemented by licensed brands from fashion houses. Competitively, L'Oréal benefits from broad market coverage, high research spending, wide regional diversification and strong advertising and distribution power. Competitors include Estée Lauder, Procter & Gamble, Unilever, Shiseido and Coty.
Score profile
Rank vs. Household & Personal Products (18 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, L'Oréal ranks among the best in the group Household & Personal Products (8.6/10). On growth, the company ranks above average in the group Household & Personal Products (6.9/10). On valuation (higher = cheaper), the stock ranks in the bottom fifth in the group Household & Personal Products (1.5/10). On financial strength, L'Oréal ranks in the middle in the group Household & Personal Products (4.7/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 29.2x | 16.5x | better than 3 % |
| Trailing P/E | 37.7x | 27.5x | better than 35 % |
| PEG ratio | 2.6x | 2.2x | better than 44 % |
| EV/EBITDA | 24.2x | 13.4x | better than 8 % |
| Price/sales | 5.2x | 2.5x | better than 3 % |
| Price/book | 7.0x | 4.1x | better than 22 % |
| Revenue growth | 5.8% | 1.4% | better than 81 % |
| Earnings growth | 5.4% | 3.6% | better than 58 % |
| Gross margin | 74.4% | 54.9% | better than 92 % |
| Operating margin | 21.3% | 14.3% | better than 86 % |
| Net margin | 13.9% | 9.4% | better than 86 % |
| Return on equity | 19.4% | 9.4% | better than 79 % |
| Debt/equity | 49.3% | 75.3% | better than 74 % |
| Current ratio | 1.0x | 1.1x | better than 47 % |
| Free cash flow yield | 2.7% | 4.1% | better than 21 % |
| Dividend yield | 1.6% | 2.5% | – |
| Payout ratio | 61.1% | 78.4% | – |
| Beta | 0.85 | 0.57 | – |
Valuation: what is L'Oréal worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give L'Oréal a model range of 234.06 EUR to 378.51 EUR per share.
24 analysts, average rating “Buy”, average price target 436.54 EUR (−1.6%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Demand for beauty and personal care products is considered comparatively stable and grows with incomes, urbanization and awareness of personal care.
- Product innovation and strong brands allow higher selling prices and a favorable product mix, especially in Luxe and Dermatological Beauty.
- Geographic breadth and the expansion of online retail open up growth in emerging markets and among new customer groups.
Risks
- Weaker consumer sentiment or reluctance to buy prestige products, for example in key markets such as China, can slow growth.
- Exchange rate fluctuations weigh on results reported in euros, as a large share of revenue is generated in other currencies.
- Regulatory requirements, product safety issues and reputational damage can harm brands and raise costs.
What to look for with L'Oréal
The operating margin shows whether brand strength and pricing power translate into sustainable profitability despite high spending on advertising and research.