L’Oreal (OTCMKTS:LRLCY) vs. Grocery Outlet (NASDAQ:GO) Critical Review

L’Oreal (OTCMKTS:LRLCY) and Grocery Outlet (NASDAQ:GO) are both consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Profitability

This table compares L’Oreal and Grocery Outlet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
L’Oreal	N/A	N/A	N/A
Grocery Outlet	-8.08%	5.69%	1.86%

Analyst Ratings

This is a breakdown of current ratings for L’Oreal and Grocery Outlet, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
L’Oreal	1	6	6	1	2.50
Grocery Outlet	2	11	0	0	1.85

Grocery Outlet has a consensus price target of $10.32, suggesting a potential upside of 7.71%. Given Grocery Outlet’s higher probable upside, analysts clearly believe Grocery Outlet is more favorable than L’Oreal.

Insider & Institutional Ownership

0.4% of L’Oreal shares are held by institutional investors. Comparatively, 99.9% of Grocery Outlet shares are held by institutional investors. 4.5% of Grocery Outlet shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares L’Oreal and Grocery Outlet”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
L’Oreal	$49.83 billion	4.85	$6.93 billion	N/A	N/A
Grocery Outlet	$4.69 billion	0.20	-$224.91 million	($3.88)	-2.47

L’Oreal has higher revenue and earnings than Grocery Outlet.

Volatility and Risk

L’Oreal has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Grocery Outlet has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Summary

L’Oreal beats Grocery Outlet on 8 of the 13 factors compared between the two stocks.

About L’Oreal

L'Oréal S.A., through its subsidiaries, manufactures and sells cosmetic products for women and men worldwide. The company operates through four divisions: Consumer Products, L'oréal Luxe, Professional Products, and Dermatological Beauty. It offers skincare, make-up, hair colourants, haircare, perfumes, and hygiene products. The company provides its products under the L'Oréal Paris, Garnier, Maybelline New York, NYX Professional Makeup, Stylenanda, Essie, Dark & Lovely, Mixa, Magic Mask, Niley, Lancôme, Yves Saint Laurent, Armani, Kiehl's Since 1851, Helena Rubinstein, Biotherm, Shu Uemura, IT Cosmetics, Ralph Lauren Fragrance, Urban Decay, Mugler, Valentino, Viktor&Rolf, Azzaro, Prada, Cacharel, Maison Margela Fragrance, Diesel, Yue Sai, Atelier Colonge, Carita, Takami, Aesop, L'Oréal Professionnel Paris, Kérastase, Redken, Matrix, Pureology, Pulp Riot, La Roche-Posay, Vichy, CeraVe, SkinCeuticals, and Skinbetter Science brands. It sells its products through distribution channels, such as hair salons, local stores, e-commerce, travel retail, mass market retail, department store perfumeries, pharmacies, drug stores, medi-spas, and free-standing stores. L'Oréal S.A. was founded in 1909 and is headquartered in Clichy, France.

About Grocery Outlet

Grocery Outlet Holding Corp. operates as a retailer of consumables and fresh products sold through independently operated stores in the United States. Its stores offer products in various categories, such as dairy and deli, produce, floral, fresh meat, seafood products, grocery, general merchandise, health and beauty care, frozen food, beer and wine, and ethnic products. The company was founded in 1946 and is headquartered in Emeryville, California.