✨ Who is the beauty king? A look at the stars of the cosmetics stocks ✨Part 1: https://getqu.in/C9QiOo/
L'Oréal and Estée Lauder regularly buy back their own shares, although the volumes vary. Beiersdorf has initiated share buybacks on a large scale for the first time.
It is noteworthy that $BEI (+3,44 %) has negative net debt. In comparison $OR (+3,35 %) is, despite its size, with a net debt similar to its smaller competitor $EL (-1,75 %) is remarkably well positioned. $ELF (-0,85 %) However, although it is moving in the market, it is not yet really significant.
In terms of the ratio of net debt to EBITDA, Beiersdorf is the best performer, as previously noted. L'Oréal follows in second place. At Estée Lauder, on the other hand, the situation is slowly becoming tense and net debt is expected to rise further.
Based on the ratio of enterprise value to EBITDA, Beiersdorf is the most attractive value, followed by Estée Lauder. L'Oréal is relatively close behind Estée Lauder. Looking at these ratios in comparison to other stocks, L'Oréal and Beiersdorf appear to be relatively favorable in the market, especially compared to some other competitors, even outside of this comparison.
L'Oréal's payoff ratio is over 50%, while Beiersdorf's is lower. Estée Lauder, on the other hand, has seen a significant increase in this ratio after a decline in revenues. Given L'Oréal's location in France, I would prefer a lower payout. In addition, long-term shareholders receive 10% higher dividends for registered shares, which I do not necessarily consider ideal. This arrangement mainly rewards large and long-term shareholders.
In terms of shareholder yield, Loreal offers a higher return than other companies. However, we also have to pay withholding tax, which reduces the actual yield accordingly.
In terms of ROIC (Return on Invested Capital), both Elf Beauty and L'Oréal are above the 10% mark and are therefore in the green zone. Beiersdorf, on the other hand, has fallen back somewhat and Estée Lauder has experienced a significant decline.
In terms of ROE (return on equity), L'Oréal and Elf Beauty are among the top performers, while the other two perform significantly lower.
The same picture emerges for ROCE (Return on Capital Employed), with Beiersdorf above the 10% mark.
In terms of ROTA, Estée Lauder is well above its competitors despite a decline. Looking at the lower ranks, however, Elf Beauty and L'Oréal are relatively close to each other.
Conclusion
L'Oréal is undoubtedly the best value in the comparison. The company shows solid growth, has an attractive net debt to EBITDA ratio and is valued roughly in line with other companies in the cosmetics sector. While it is unfortunate that the location in France leads to additional costs for financial transactions and withholding taxes, for long-term investors this disadvantage is mitigated by the strong positioning. Looking at the industry, which is growing by around 5% annually, L'Oréal is in an excellent position. Moreover, the company does not shy away from M&A activities and the acquisition of brands. The capital efficiency of these transactions also appears positive, especially when considering the non-declining returns on capital. Overall, L'Oréal is the best approach to be invested in the cosmetics industry. However, L'Oréal does not have to be the only stock in the portfolio. A mixture of L'Oréal and possibly $ULVR (-0,87 %) or $PG (-1,94 %) could provide a good mix of different industries in the consumer goods sector.
