Looking for a global market leader with great growth potential? Here comes EssilorLuxottica! Who please?

EL is the world's number 1 in the eyewear market with a share of around 25 percent. The beauty of the group from Paris is that they cover the entire value chain from design, manufacturing and distribution in their own stores.

Actually only formed in 2018 from the merger of the French Essilor with the Italian eyewear manufacturer Luxottica, there is a fantastic long-term chart (emerging from the French lens specialist), which has "shed" an average of 11% per year over the past 20 years.

Initially after the merger, there were probably disputes at the management level and also subsequently with the large acquisition of GrandVision (NL, including Apollo Optik) problems, in addition, of course, the stores were closed in the pandemic. Also due to newly issued shares in the course of the merger, the price has more or less been treading water for several years.

Why should EL have such great potential?

An eye doctor gave us the idea. To put it simply: every young person today has a cell phone in front of their nose. And while "in the past" you needed your first pair of glasses at the age of 45 (+/-), today you need them much earlier, at the age of 30. Of course, this also means that new glasses are needed more and more often.

Whether this is really true is actually beside the point. There are more and more people and therefore a "company with a moat" like EL is predestined in the long term to increase sales and profits. As the chart shows, they have been demonstrating for some time now.

Otherwise, the long-term numbers (which I have from Luxottica) are nice, but not very meaningful due to the merger and acquisitions. In 2010, revenue/share was €12.59, and €50.95 is expected for 2022. Dividend development is overall very positive (2010 €0.44, 2022e €2.85), but fluctuating and "afflicted" with default in 2019 and French withholding tax in addition.

If you can get over that, EssilorLuxottica is a promising European growth group with a great long-term chart and a current discount of about 20-25% from the high price.

Do you know EL? Are you invested?