Tier List: Cosmetics

Comparing stocks in a given industry

The global cosmetics industry is projected to grow to $450 billion, up from $295 billion in 2024, reflecting a CAGR of 6%. With shifting trends and intense competition, market leadership can easily change hands, making it crucial to identify the strongest players in the field.

In this article, we will analyze 15 key companies shaping the future of the cosmetics industry:

• L’Oreal

• E.L.F Beauty

• Interparfums

• Procter&Gamble

• Ulta Beauty

• Robertet

• Unilever

• Beiersdorf

• Givaudan

• Galderma

• Kenvue

• Shiseido

• Estee Lauder

• Coty

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S-Tier

1. L’Oreal

L'Oreal is the world's largest cosmetics company, offering a diverse range of products across skincare, haircare, makeup, and fragrances. It owns iconic brands such as Lancôme or Maybelline. L'Oreal is also a pioneer in beauty innovation, investing heavily in research and development while focusing on sustainability, digital beauty and ethical sourcing. As a global leader consistently expanding its market share, L'Oréal firmly holds an S-Tier position in the beauty industry.

2024 growth: 6.7%

Net profit margin: 15.2%

ROE: 17.2%

Debt leverage: 0.2x EBITDA

PE: 31.6x

Dividend yield: 1.77%

A-Tier

2. E.L.F. Beauty

E.L.F. is experiencing rapid growth, particularly by expanding its market share in the U.S. This strong momentum is driving significant increases in both net profit margin and capital efficiency. With a reasonable valuation and an expected 2026 PE of around 15x, the company shows solid financial prospects. However, the key question remains whether this momentum can be sustained over the long term. Even minimal dilution is unnecessary.

2024 growth: 29.1%

Net profit margin: 12.0%

ROE: 15.7%

Debt leverage: 0.1x EBITDA

PE: 38.8x

Dividend yield: -%

3. Interparfums

Despite recent concerns about losing major licenses, Interparfums continues to demonstrate strong expertise in the beauty industry, particularly in fragrances, as reflected in its consistent growth. After years of being overvalued, the stock has now returned to more reasonable valuations.

2024 growth: 10.2%

Net profit margin: 11.4%

ROE: 14.6%

Debt leverage: 0.0x EBITDA

PE: 24.1x

Dividend yield: -%

B-Tier

4. Procter & Gamble

Despite modest growth, Procter & Gamble maintains a strong foothold in the cosmetics market, sustaining robust profit margins and solid capital efficiency. However, heightened competition poses a significant risk, as the company faces the challenge of competing across multiple fronts.

2024 growth: 2.7%

Net profit margin: 19.6%

ROE: 18.2%

Debt leverage: 0.9x EBITDA

PE: 24.2x

Dividend yield: 2.40%

5. Ulta

The company's slowing growth is offset by strong capital efficiency, a reasonable valuation, and a solid balance sheet, positioning it as a value play within the sector. While it still has opportunities to enhance its growth profile, it faces significant challenges, including competition and broader economic conditions.

2024 growth: -0.3%

Net profit margin: 9.9%

ROE: 29.5%

Net cash position: 0.4x EBITDA

PE: 15.9x

Dividend yield: -%

6. Robertet

Robertet stands out as an intriguing B2B player, specializing in natural raw materials and fragrances for leading companies in the industry. The growing demand for natural ingredients creates a strong tailwind for the company, while its dedicated supply chains offer a clear competitive edge. However, despite these strengths, the company's projected growth remains relatively average from 2025, around 5%/

2024 growth: 9.7%

Net profit margin: 10.9%

ROE: 11.9%

Debt: 0.8x EBITDA

PE: 23.1x

Dividend yield: 1.06%

C-Tier

7. Unilever

Although Unilever is a global leader, much like Procter & Gamble, it falls short in terms of growth, consistency, and margins. Unfortunately, this underperformance isn't reflected in a significantly lower valuation.

2024 growth: 2.1%

Net profit margin: 11.1%

ROE: 36.3%

Debt: 1.9x EBITDA

PE: 21.2x

Dividend yield: 3.12%

8. Beiersdorf

While Beiersdorf boasts more dynamic growth compared to some competitors, its net profit margin remains low, in contrast to its high valuation with a PE ratio above 30x. The company's real advantage lies in its $5 billion net cash position, representing one-sixth of its market capitalization, which provides significant strategic flexibility.

2024 growth: 5.1%

Net profit margin: 9.7%

ROE: 8.7%

Net cash position: 2.7x EBITDA

PE: 30.9x

Dividend yield: 0.79%

9. Givaudan

The Swiss leader in flavor and fragrance manufacturing is primarily allocating its excess cash toward dividends and debt reduction. While the company demonstrates strong fundamentals, this is offset by slow growth and a premium valuation.

2024 growth: 6.3%

Net profit margin: 14.9%

ROE: 11.7%

Debt: 2.3x EBITDA

PE: 37.9x

Dividend yield: 1.65%

10. Galderma

Having recently gone public, the company is experiencing growth that outpaces its market. Despite less-than-ideal current metrics, improvement is anticipated, with a projected 2026 net profit margin of 13% and a 2026 PE below 30x. However, it still has much to prove and debt level if high.

2024 growth: 9.3%

Net profit margin: 5.1%

ROE: 5.3%

Debt leverage: 2.2x EBITDA

PE: 110x

Dividend yield: 0.09%

D-Tier

11. Kenvue

Examining this spin-off from Johnson & Johnson, it is clear why the parent company chose to divest these operations: limited growth prospects and significant debt. However, margins are expected to improve in the coming year, which should lead to a more favorable PE ratio.

2024 growth: 1.4%

Net profit margin: 9.3%

ROE: 7.8%

Debt leverage: 1.9x EBITDA

PE: 26.6x

Dividend yield: 3.75%

12. Estee Lauder

Estée Lauder is currently struggling with declining revenue and market share losses, making comparisons with its major competitor, L’Oréal, particularly unfavorable. While the company is expected to regain some momentum in the coming years, it faces a long road ahead before returning to its previous performance levels.

2024 growth: 0.5%

Net profit margin: 6.1%

ROE: 3.6%

Debt leverage: 1.9x EBITDA

PE: 36.1x

Dividend yield: 2.97%

E-Tier

13. Shiseido

The Japanese cosmetics company has shown poor performance, with 2026 revenue expected to fall below 2019 levels. Margins are low, debt is manageable but still present, and the valuation remains high. Aside from a potential margin improvement and strong brand recognition, the company offers few compelling strengths.

2024 growth: 4.6%

Net profit margin: 2.1%

ROE: 0.7%

Debt leverage: 2.1x EBITDA

PE: 69.6x

Dividend yield: 1.63%

14. Coty

With low margins, average growth, debt, and erratic free cash flow, the company is making efforts to improve its situation. However, its current market cap, just half of its 2017 value, reflects ongoing challenges in finding a clear path forward. While reasonably valued and potentially a good investment if a rebound occurs, signs of meaningful improvement remain limited, though not absent.

2024 growth: 5.7%

Net profit margin: 5.5%

ROE: 3.2%

Debt leverage: 2.7x EBITDA

PE: 22.7x

Dividend yield: -%

Conclusion

The real challenge in the cosmetics industry is longevity, surviving shifts in consumer trends. While giants like L’Oreal have mastered this, any reversal in their market position could lead to a rapid decline, much like what happened with Estee Lauder.

This is why the market often favors smaller companies, such as e.l.f. Beauty, which are gaining significant market share, or B2B firms like Givaudan and Robertet that offer more stability, being less reliant on consumer brands.

That said, L’Oreal remains a dominant leader, driven by strong innovation both in product development and the digital space.