OR:FRA - Embedded Expectations Analysis - 2018 11 14
L'Oréal S.A. (OR:FRA) trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 27.5x Uniform P/E, implying optimistic expectations for the firm. However, management has concerns about their research and innovation expense levels, consumer division in Brazil, and their ability to further improve their brand imageSpecifically, management may lack confidence in their ability to sustain current R&I expense levels while improving profitability, and may be concerned about their weak consumer division in Brazil. Moreover, they may lack confidence in their decision to invest in high-growth Asian brands, and may be exaggerating their focus on their return on investment research. Finally, they may lack confidence in their ability to fuel growth in H2 2018 through increased advertising and promotion, and to further improve their brand equity
L'Oreal acts as a holding company. Through its subsidiaries, Co. plays a strategic coordination role and scientific, industrial and marketing coordination role on a global basis. Co. develops, manufactures and commercializes products for Skin care, Hair care, Make-up, Perfumes, Toiletries and deodorants, and Oral cosmetics. Co. has three branches: Cosmetics, Body shop and Dermatology. Co.'s principal activities comprise four divisions: Professional Products, Consumer Products, L'Oreal Luxe and Active Cosmetics. The Body Shop branch offers various cosmetics and toiletry products. The Dermatology branch offers topical dermatology prescription, and corrective and aesthetic dermatology.
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