L'Oréal: Further Upside After Strong 2022
(Preview) Company Update (OR FP) (Buy)
Summary
L'Oréal's strong 2022 results gave it like-for-like compounded annualized growth of 7.3% in sales and 9.0% in EBIT across 2019-22.
The company grew faster than the market in all geographies and categories, including in China, and faster than Estée Lauder.
L'Oréal expects the Beauty market to continue an average annual growth of 4-5%. We believe this means its EBIT will grow at about 9%.
L’Oréal shares have a 34.1x P/E and an 1.6% dividend yield, largely justified by its proven resilience and strong potential.
With shares at €383.70, we expect a total return of 30% (10.2% annualized) by 2025 year-end. Buy.
Introduction
L'Oréal SA released 2022 results on February 9. Since then L'Oréal shares have been roughly flat (up 1.3%), having risen by more than 27% since their last trough in November 2022 but up only 6% from a year ago.
Our current Buy rating on L'Oréal followed an upgrade in March 2022. In the one year since our upgrade, L'Oréal shares have gained 14.9% (including dividends).
L'O…