L'Oreal (LRLCY) AI Stock Analysis

• Market Cap: $222.60B
• Dividend Yield: 1.89%
• Average Volume (3M): 35.19K
• Price to Earnings (P/E): 31.7
• Beta (1Y): 0.30
• Revenue Growth: 3.19%
• EPS Growth: -4.86%
• Country: US
• Employees: 94,397
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Household & Personal Products
• EPS (TTM): 1.34
• Shares Outstanding: 2,668,915,000
• 10 Day Avg. Volume: 17,828
• 30 Day Avg. Volume: 35,188
• PEG Ratio: -3.92
• Price to Book (P/B): 5.57
• Price to Sales (P/S): 4.42
• P/FCF Ratio: 27.16
• Enterprise Value/Market Cap: 0.87
• Enterprise Value/Revenue: 4.40
• Enterprise Value/Gross Profit: 5.75
• Enterprise Value/Ebitda: 18.09
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 3.2
• Revenue Forecast (FY): $54.09B

• Rating: 69 Neutral
• Price Target: $92.00 ▲(8.29% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is driven primarily by strong underlying financial performance (durable margins, strong ROE, and manageable leverage), partially offset by weaker near-term technicals (RSI below 50 and price below the 20-day average) and a relatively high P/E with only a modest dividend yield.

Positive Factors

Durable margins

L'Oréal's consistently high gross (71–74%) and EBIT (17–20%) margins reflect durable pricing power and efficient cost management across brands and channels. Structural profitability supports sustained R&D, branding and marketing investment, enabling long-term reinvestment and competitive advantage.

Strong ROE & balance sheet

ROE near 17–21% alongside moderate leverage (D/E ~0.21–0.34) and expanding equity indicates disciplined capital allocation and a resilient balance sheet. This structural strength supports funding of organic growth, selective M&A and shareholder returns without excessive financial risk over the medium term.

Cash generation

Free cash flow converting roughly 79–85% of net income provides durable internal funding for dividends, buybacks and reinvestment. That level of cash conversion reduces reliance on external capital and underpins consistent capital deployment even in varied operating cycles.

Negative Factors

Rising debt

A step-up in debt in 2025, even from moderate leverage, reduces financial flexibility and raises interest exposure. If earnings or cash flow weaken, higher debt can constrain discretionary spending on M&A, buybacks or reinvestment, creating a sustained pressure point on capital allocation.

Volatile free cash flow

Choppier free cash flow with a notable decline in 2025 points to structural variability from working capital or investment timing. Persistent FCF volatility impairs predictability of shareholder returns and internal funding for strategic initiatives, increasing reliance on external financing in stress periods.

Net margin compression

Net margin softening in 2025 versus prior years suggests emerging cost or mix pressures that can erode profitability. If structural (higher input costs, promotional mix or lower-margin channels), sustained compression would weaken long-term return on capital and the company's margin durability.

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 primarily through the sale of beauty products across its various divisions. The Consumer Products division, which includes mass-market brands, is a significant revenue contributor, driven by high-volume sales in retail channels. The Professional Products division supplies haircare and styling products to salons and professionals, while the L'Oreal Luxe division focuses on high-end cosmetics and fragrances, appealing to premium market segments. Additionally, the Active Cosmetics division offers dermatological products aimed at health-conscious consumers. The company leverages partnerships with retailers, e-commerce platforms, and beauty salons to enhance distribution and reach. Significant marketing campaigns and brand collaborations also contribute to its earnings. L'Oreal invests heavily in research and development to innovate and expand its product offerings, further driving sales and customer loyalty.

L'Oreal Financial Statement Overview

Summary

Strong profitability profile (high gross margins ~71–74% and solid EBIT margins ~17–20%) and consistently strong ROE (~17–21%) support a high-quality financial picture. Offsetting factors include softer net margin in 2025, a step-up in debt in 2025 versus 2024, and choppier free cash flow (including a decline in 2025) despite generally solid cash conversion.

Income Statement

L'Oreal shows strong, resilient profitability with consistently high gross margins (~71–74%) and solid operating profitability (EBIT margin ~17–20%) across the period. Revenue has grown steadily since 2020 (after a 2020 dip), with 2025 showing a very strong growth print, but net margin softened in 2025 versus 2023–2024, suggesting some cost or mix pressure. Overall, the income statement reflects a high-quality franchise with durable margins, tempered by recent profit-margin compression.

Balance Sheet

The balance sheet looks healthy with moderate leverage: debt-to-equity remains manageable (~0.21–0.34) and equity has expanded over time, supporting balance-sheet strength. Returns on equity are consistently strong (~17–21%), indicating effective capital use. The key watch item is the step-up in debt in 2025 versus 2024, which reduces flexibility modestly even though leverage is still not elevated for the business profile.

Cash Flow

Cash generation is solid, with free cash flow consistently covering a large portion of net income (~0.79–0.85), supporting dividends/buybacks and reinvestment capacity. However, operating cash flow is relatively low versus EBIT (coverage ~0.41–0.58) and free cash flow growth has been choppy, including a notable decline in 2025 after prior growth, pointing to working-capital or investment variability. Overall cash flow quality is good, but not as consistently strong as earnings.

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	31.45B	32.26B	30.42B	27.68B	23.85B
EBITDA	10.69B	9.64B	8.97B	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	11.92B	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: Negative
• Last Price: 84.96
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LRLCY, the sentiment is Negative. The current price of 84.96 is below the 20-day moving average (MA) of 89.61, below the 50-day MA of 89.89, and below the 200-day MA of 87.85, indicating a bearish trend. The MACD of -2.05 indicates Positive momentum. The RSI at 33.43 is Neutral, neither overbought nor oversold. The STOCH value of 1.48 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LRLCY.

L'Oreal Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PG	74 Outperform	$356.32B	20.05	31.23%	2.92%	1.23%	17.97%
LRLCY	69 Neutral	$222.60B	31.75	18.53%	1.89%	3.19%	-4.86%
UL	69 Neutral	$141.82B	20.76	26.01%	3.74%	-0.30%	-14.60%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
CL	61 Neutral	$71.83B	-429.64	431.59%	2.67%	-0.05%	2.49%
EL	55 Neutral	$33.11B	58.52	-4.41%	1.30%	-6.36%	-554.84%
COTY	51 Neutral	$2.06B	-5.46	-14.49%	―	-5.68%	-358.36%