L'Oreal (OR) AI Stock Analysis

• Market Cap: €211.59B
• Dividend Yield: 1.91%
• Average Volume (3M): 351.32K
• Price to Earnings (P/E): 34.6
• Beta (1Y): 0.74
• Revenue Growth: 2.60%
• EPS Growth: -5.44%
• Country: FR
• Employees: 94,397
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Household & Personal Products
• EPS (TTM): 5.64
• Shares Outstanding: 533,783,000
• 10 Day Avg. Volume: 286,001
• 30 Day Avg. Volume: 351,321
• PEG Ratio: -7.51
• Price to Book (P/B): 5.60
• Price to Sales (P/S): 4.44
• P/FCF Ratio: 27.32
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €394.82
• Price Target Upside: -0.65% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 13.58
• Revenue Forecast (FY): €45.89B

• Rating: 72 Outperform
• Price Target: €413.00 ▲(3.93% Upside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by strong financial performance (high margins, strong ROE, and consistent cash generation), tempered by near-term 2025 pressure (lower net income/FCF and higher debt). Technical signals are currently weak, and valuation is relatively rich given the ~32x P/E, with only partial support from the ~1.88% dividend yield.

Positive Factors

Global brand portfolio

L'Oreal's diversified, multi‑tier brand portfolio and global footprint create durable competitive advantages: scale across channels, cross‑market R&D leverage, and broad consumer reach. This breadth reduces reliance on any single market or segment and supports steady long‑term revenue resilience.

Premium margins & profitability

Consistently high gross and operating margins reflect strong pricing power, efficient supply chains, and profitable product mix. These durable profitability levels provide structural cash flow generation, fund innovation and marketing, and offer resilience to moderate cost inflation over a multi‑month horizon.

High cash generation & strong ROE

Reliable free cash flow conversion and high returns on equity underpin financial flexibility: ability to fund dividends, buybacks, and M&A (e.g., Galderma stake) without over‑reliance on external financing. This cash strength supports strategic investment and shareholder returns long term.

Negative Factors

Rising leverage in 2025

A marked increase in total debt in 2025 elevates financial risk by adding interest and refinancing exposure. Even with a sizable equity base, sustained higher leverage could constrain strategic flexibility, raise financing costs, and amplify downside in a weaker demand or rising rate environment.

2025 profit & FCF pressure

Declines in net income and free cash flow despite higher revenue point to margin compression or one‑off costs. If structural (costs, mix, or inefficiencies), this reduces internal funding for M&A and returns, and signals potential challenges in converting sales growth into durable profits.

Slowing top‑line growth

A clear deceleration in reported and like‑for‑like growth highlights maturation and tougher comps across core markets. Slower organic growth limits operating leverage and makes margin expansion and long‑term EPS growth more dependent on successful new launches, pricing, or acquisitive moves.

L'Oreal Business Overview & Revenue Model

Company Description

L'Oréal S.A., through its subsidiaries, manufactures and sells cosmetic products for women and men worldwide. The company operates through four divisions: Consumer Products, L'oréal Luxe, Professional Products, and Active Cosmetics. It offers shampoos, hair care products, shower gels, skin care products, cleansers, hair colors, styling products, deodorants, sun care products, make-up, perfumes, etc. The company provides its products under the L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Essie, Niely, Dark and Lovely, Lancôme, Yves Saint Laurent Beauté, Giorgio Armani Beauty, Kiehl's, Urban Decay, Biotherm, Ralph Lauren, IT Cosmetics, L'Oréal Professionnel, Kérastase, Redken, Matrix, Biolage, Pureology, Decléor, Carita, Vichy, La Roche-Posay, SkinCeuticals, Roger&Gallet, CeraVe, Stylenanda, Mixa, Magic Mask, Prada, Helena Rubinstein, Valentino, Mugler, Shu Uemura, Viktor&Rolf, Azzaro, Diesel, Atelier Cologne, Cacharel, and Yue Sai brands. It sells its products through distribution channels, such as hair salons, mass-market retail channels, perfumeries, department stores, pharmacies, drugstores, medispas, branded retail, travel retail, and e-commerce. L'Oréal S.A. was founded in 1909 and is headquartered in Clichy, France.

How the Company Makes Money

L'Oreal generates revenue through the sale of a wide range of beauty products across multiple distribution channels, including retail, e-commerce, and professional salons. Key revenue streams include mass-market products, luxury cosmetics, professional products, and active cosmetics. The company also invests heavily in research and development to innovate and expand its product offerings, which helps in maintaining a competitive edge. Strategic partnerships with retailers, beauty influencers, and online platforms further enhance its market reach. Additionally, L'Oreal's strong global presence allows it to capitalize on emerging markets and adapt to changing consumer trends, contributing significantly to its overall earnings.

L'Oreal Financial Statement Overview

Summary

Strong overall fundamentals: premium profitability (gross margin ~72%–74%, operating margin ~17%–20%), solid net margins (~14%–15%), and reliable free cash flow coverage (~79%–85% of net income). Key watch items are 2025 pressure (net income and free cash flow down despite higher revenue) and a sharp increase in total debt.

Income Statement

L'Oreal shows strong and consistent profitability with very high gross margins (roughly 72%–74% from 2021–2024) and solid operating margins (about 17%–20%). Revenue expanded steadily from 2021–2024, with growth easing to ~5.6% in 2024 (after stronger growth in 2021–2023), signaling a healthy but normalizing trajectory. Net margins remain robust (~14%–15% in 2021–2024). A key watch item is 2025: while revenue rose, net income declined versus 2024, suggesting some pressure from costs, mix, or other below-the-line items.

Balance Sheet

The balance sheet is generally solid with moderate leverage: debt-to-equity stayed around ~0.21–0.30 during 2021–2024, and returns on equity were strong (~19%–21% in 2021–2024). Equity has grown meaningfully over time, supporting financial flexibility. The main concern is the sharp jump in total debt in 2025 versus prior years, which could increase financial risk if sustained, even though the company still appears well-capitalized given its sizeable equity base.

Cash Flow

Cash generation is strong and high-quality: free cash flow consistently covered a large portion of earnings (about ~79%–85% of net income in 2020–2024). Operating cash flow and free cash flow rose across 2021–2024, and free cash flow growth was positive in most years. However, free cash flow declined in 2022 and again in 2025 (with 2025 showing a modest pullback), indicating some volatility in cash conversion and/or investment levels that investors should monitor.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	44.05B	43.49B	41.18B	38.26B	32.29B
Gross Profit	32.74B	32.26B	30.42B	27.68B	23.85B
EBITDA	10.69B	10.39B	9.94B	9.16B	7.54B
Net Income	6.13B	6.41B	6.18B	5.71B	4.60B
Balance Sheet
Total Assets	61.82B	56.35B	51.86B	46.84B	43.01B
Cash, Cash Equivalents and Short-Term Investments	9.87B	4.08B	4.32B	2.62B	2.72B
Total Debt	13.28B	8.49B	8.69B	5.65B	6.30B
Total Liabilities	26.82B	23.22B	22.77B	19.66B	19.42B
Stockholders Equity	34.95B	33.13B	29.07B	27.18B	23.59B
Cash Flow
Free Cash Flow	7.16B	6.64B	6.12B	4.93B	5.65B
Operating Cash Flow	8.66B	8.29B	7.60B	6.28B	6.73B
Investing Cash Flow	-1.41B	-3.70B	-4.14B	-2.22B	-1.63B
Financing Cash Flow	-1.40B	-4.79B	-1.61B	-4.08B	-8.86B

L'Oreal Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 397.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:OR, the sentiment is Positive. The current price of 397.4 is above the 20-day moving average (MA) of 392.92, above the 50-day MA of 383.32, and above the 200-day MA of 377.11, indicating a bullish trend. The MACD of 4.18 indicates Negative momentum. The RSI at 55.81 is Neutral, neither overbought nor oversold. The STOCH value of 71.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:OR.

L'Oreal Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RBT	76 Outperform	€1.73B	18.69	18.22%	1.15%	10.55%	13.50%
OR	72 Outperform	€211.59B	34.62	20.13%	1.91%	2.60%	-5.44%
EDEN	68 Neutral	€4.63B	8.97	―	6.47%	7.04%	73.35%
ITP	65 Neutral	€2.07B	15.65	20.31%	3.66%	9.68%	19.46%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
SW	61 Neutral	€6.79B	9.75	18.37%	6.20%	1.16%	314.94%
JBOG	56 Neutral	€46.39M	-4.59	―	3.88%	-3.97%	-269.15%