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People seldom think of Paris as an industrial city. There is too much about France's capital that is focused on love and leisure: wispy dreams evoke romantic walks along the Seine quay, restaurants where you can woo a partner all night over endless courses, and a generally timeless atmosphere that defines the expression joie de vivre.
Shares of European luxury goods groups fell on Tuesday after L'Oreal was downgraded by Deutsche Bank to sell.
L'Oreal's price has risen by over 40% since October last year, and its H1 2023 figures indicate that there could be more upside. The company's like-for-like sales growth has risen, and its operating margin has expanded, even as reported sales softened on an adverse exchange rate effect. Analysts are optimistic about L'Oreal's performance in 2023, with expected EPS growth of 16.4%.
L'Oréal is the leading provider and manufacturer of beauty products. The company has enjoyed years of growth thanks to its strong pricing power and brand equity. According to my valuation, the stock is currently fairly valued.
L'Oreal is the premier beauty business, with over 30 brands contributing to a market-leading position. L'Oreal's growth has been consistent and robust in the last decade, with industry tailwinds expected to support this level going forward. Margins are equally attractive, with incremental improvements achieved.
It pays to invest in stocks with billionaire-backing. How's that, you ask?
L'Oreal SA (LRLCY) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #2 (Buy).
L'Oreal recently acquired the Aēsop cosmetics brand for $2.5 billion. Several luxury brand companies and private equity firms were competing for it.
Hopes of a less hawkish FED could boost the Consumers Staples sector with several stocks among the Zacks Cosmetic Industry standing out in particular.
L'Oreal stock has risen from $72 in early January to $92 now.