L’Oréal: Steady as She Goes After Solid Finish to 2024 and CAGNY
Company Update (OR FP) (Buy): Recent news again show L’Oréal’s defensive quality, though earnings may be more volatile in 2025.
Highlights
Beauty market grew 4.5% in 2024 and is expected to grow 4.0-4.5% in 2025.
L’Oréal is growing ahead of market, and EBIT is growing ahead of sales.
But 2025 EPS growth will be distorted by investment phasing, tax surcharge.
Diversification provides resilience against Trump’s tariffs and trade wars.
At €347.75, we see a 67% total return (14.7% p.a.) by 2028 year-end. Buy.
Introduction
We review our Buy rating on L’Oréal after the company reported Q4 2024 results on February 6 and senior executives presented at the Consumer Analyst Group of New York (“CAGNY”) conference on February 21.
L’Oréal shares are currently just 10% above their 52-week low, and at the level where they were back in early 2023:
L’Oréal Share Price (Last 5 Years)
Source: Google Finance (24-Feb-25).
L’Oréal is a mid-sized position in our “Select 15” model portfolio, initiated in September 2024 and expanded in October; the position is currently showing a 4.3% gain (in dollars). We also hold L’Oréal shares in real life. Our current Buy rating on L’Oréal was re-initiated in April 2024, and we published our first online article about L’Oréal in March 2020.
L’Oréal is a high-quality defensive asset, and recent events have continued to demonstrate this. Earnings growth was strong in 2024, the valuation is reasonable, and we expect to see a low-teens annualised return over the next few years.
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