L’Oreal Earnings: Sales Momentum Points to Another Beautiful Year

Powered by double-digit sales growth in both consumer products and dermatological beauty (formerly known as active cosmetics), wide-moat L’Oreal’s 2023 first-quarter sales put it on track to exceed our full-year forecast. The firm recorded 14.6% sales growth (13% like for like) in the quarter, above FactSet consensus of about 8% and outpacing our 6% sales growth estimate for the year. Given this strong start and our expectation that consumer spending in China is recovering, we expect to revise our 2023 estimates and lift our EUR 326 fair value estimate by a low-single-digit percentage. However, we believe L’Oreal’s current valuation more than reflects its sales and margin expansion opportunities.