Given its attractive valuation, we believe that Estée Lauder stock (NYSE: EL) is currently a better pick over its peer, L'Oréal stock (OTCMKTS: LRLCY). LRLCY stock trades at a higher valuation multiple of 5.7x revenues, versus 2.6x for EL stock.
L'Oréal is a high-quality company in the beauty industry with a track record of rapid earnings growth. The company is operating in an industry with a secular growth trend, has high margins, a solid balance sheet and a management team with significant skin in the game. Despite the relatively low dividend yield of 1.5%, the high, safe and constant dividend growth makes up for it.
At the Viva Technology conference in Paris, L'Oreal showed off demonstrations of "bioprinting," technology that can 3D print humanlike skin, in action. The firm has been using this tech for several years to test new makeups on synthetic skin in its lab rather than animals.