DCF Studio

    OR.PA · PAR · Consumer Defensive

    L'Oréal S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 214.79

    Market price

    EUR 376.05

    Implied upside

    -42.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 214.79-42.9%
    Exit multiple
    EUR 382.76+1.8%
    Market price
    EUR 376.05

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 46.2bnEUR 48.4bnEUR 50.7bnEUR 53.2bnEUR 55.7bn+4.8%
    EBITEUR 9.2bnEUR 9.6bnEUR 10.1bnEUR 10.6bnEUR 11.1bn+4.8%
    NOPATEUR 6.9bnEUR 7.3bnEUR 7.6bnEUR 8.0bnEUR 8.4bn+4.8%
    Add depreciation & amortisationEUR 1.9bnEUR 2.0bnEUR 2.1bnEUR 2.2bnEUR 2.3bn+4.8%
    Less capital expenditureEUR -1.7bnEUR -1.7bnEUR -1.8bnEUR -1.9bnEUR -2.0bn+4.8%
    Less increase in working capitalEUR -208.4mEUR -218.4mEUR -228.9mEUR -239.9mEUR -251.5m+4.8%
    Free cashflow to firmEUR 7.0bnEUR 7.3bnEUR 7.7bnEUR 8.0bnEUR 8.4bn+4.8%
    Discount factor0.96040.88580.81700.75350.6950-
    Present valueEUR 6.7bnEUR 6.5bnEUR 6.3bnEUR 6.1bnEUR 5.9bn-3.3%
    Present Value Of The ForecastEUR 31.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.926Reported 0.890, pulled toward 1.0 (Blume)
    Cost of equity8.76%Risk-free + beta x equity risk premium
    Cost of debt3.67%Interest expense / average total debt
    Market capitalisationEUR 200.3bn94.4% of capital
    Total debtEUR 11.9bn5.6% of capital, book value as a proxy
    Tax rate24.4%Effective, capped at statutory
    WACC8.42%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareEUR 214.79

    73% of EV

    Forecast FCFF, final year
    EUR 8.4bn
    Capex at depreciation, working capital in reinvestment
    EUR 8.4bn
    Less reinvestment at g/ROIC (14.8% of NOPAT)
    EUR -1.2bn
    Capitalised
    EUR 7.1bn
    ROIC (reported)
    16.8%
    Terminal value, undiscounted
    EUR 123.2bn
    Terminal value, discounted
    EUR 85.6bn
    Enterprise value
    EUR 117.0bn
    Less net debt
    EUR 2.0bn
    Equity value
    EUR 115.0bn

    Exit at 18.9x EBITDA

    Value per shareEUR 382.76

    85% of EV

    Terminal value, undiscounted
    EUR 252.6bn
    Terminal value, discounted
    EUR 175.6bn
    Enterprise value
    EUR 206.9bn
    Less net debt
    EUR 2.0bn
    Equity value
    EUR 204.9bn

    Spread between methods: 56%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.42%279.26297.46320.21349.51388.72
    7.42%232.84243.76256.83272.78292.71
    8.42%199.80206.74214.79224.27235.62
    9.42%175.08179.66184.85190.81197.72
    10.42%155.89158.98162.43166.31170.70

    Outlined: this model. Green text: above today's price of 376.05. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year4.8%18.9%+14.0pp
    EBIT margin19.9%34.5%+14.7pp
    Discount rate8.4%5.8%-2.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.