L’Oreal’s Skyrocketing Growth: A Reality Check

L’Oreal SA, the behemoth of the cosmetics and beauty industry, has just dropped a bombshell: record growth in FY 2024 earnings. But let’s not get carried away with the celebratory champagne just yet. We need to dig deeper and separate the wheat from the chaff.

According to recent highlights from the company’s earnings call, L’Oreal’s stock price has been on a wild ride, oscillating between 316.3 EUR and 461.85 EUR over the past year. And where is it currently sitting? A mere 342.45 EUR. Not exactly a stellar performance, if you ask me.

But what about the numbers? The technical analysis reveals a price to earnings ratio of 30.1 and a price to book ratio of 6.56. These numbers scream “overvaluation” to anyone who dares to listen. Is L’Oreal’s growth really worth the hefty price tag?

Here are the cold, hard facts:

• Revenue growth: 10.2% YoY
• Net income growth: 12.3% YoY
• Gross margin: 64.5% (down from 65.2% in FY 2023)

Don’t get me wrong; these numbers are impressive. But let’s not forget that the company’s valuation is already sky-high. Is it really worth paying a premium for a company that’s growing at a rate that’s merely above average?

The answer, of course, is a resounding “maybe.” But one thing is certain: L’Oreal’s growth is not without its challenges. The company faces intense competition from up-and-coming players in the market, not to mention the ever-present threat of economic downturn.

So, before you start popping the champagne corks, take a step back and do your due diligence. Is L’Oreal’s growth really worth the price? Or is it just a case of “buying high and selling low”? The answer, as always, is up to you.