GICS Sector : Healthcare
EssilorLuxottica Société anonyme designs, manufactures, and distributes ophthalmic lenses, frames, and sunglasses in North America, Europe, Latin America, Asia, Oceania, and Africa.It operates in five segments: Wholesale, Retail, Lenses and Optical Instruments, Equipment, and Sunglasses and Readers.The Wholesale segment engages in the manufacture and wholesale distribution of luxury and sports eyewear.
EssilorLuxottica reported a strong set of FY2025 results, with revenue growth of 11% at constant currency to EUR 28.5 billion. The company's adjusted operating profit reached EUR 4.5 billion, despite headwinds from U.S. tariffs and exchange rates. The EPS came in at EUR 2.65, in line with estimates. The company's gross margin was down 260 basis points due to the impact of tariffs and the higher contribution of AI glasses to the growth rate. As Francesco Milleri noted, "Our AI glasses category has been a key driver of growth, with more than 7 million units sold in 2025."
Publication Date: Feb -13
The company's regional performance was strong, with North America delivering 24% sales growth in the fourth quarter, while EMEA delivered 16% sales growth. In EMEA, optical comps were in the high single-digit territory, while the Sun part of the business saw double-digit growth. The Asia Pacific region saw top-line growth of 11.6%, driven by double-digit growth in India, Australia, and Southeast Asia.
The direct-to-consumer region saw strong growth, with the Sun banner just below double-digit growth, driven by Ray-Ban stores, Sunglass Hut stores, and Oakley stores. The company's myopia category in China delivered another great quarter of double-digit growth, with revenues making up 27% of the total business.
The company's operating expenses as a percentage of revenue were down 170 basis points, due to investments in new strategic initiatives and a deep exercise to relook at the organization. The company generated a record-high free cash flow of EUR 2.796 billion in 2025, despite material headwinds from tariffs and currencies. The net debt-to-EBITDA ratio was 1.7 at the end of 2025, confirming the company's ability to maintain a strong balance sheet.
Using the current price, the stock trades at a P/E Ratio of 50.53, EV/EBITDA of 18.42, and a Dividend Yield of 1.5%. The high P/E ratio suggests that the market is pricing in significant growth expectations for the company. With analysts estimating next year's revenue growth at 10.5%, the stock's valuation appears to be justified, but investors should be cautious about the potential risks and headwinds facing the company.
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EssilorLuxottica SA's Direct-to-Consumer segment growth of 7.0% is driven by increasing demand for online eyewear, strategic acquisitions, and strong brand portfolio. The company's e-commerce platform and retail expansion have enhanced customer experience, contributing to revenue growth.
Professional Solutions (PS) growth of 5.5% driven by increasing demand for eye care services, expanding optometrist and ophthalmologist networks, and high-margin equipment sales. EssilorLuxottica's strong brand portfolio and innovative product offerings, such as Varilux lenses, also contribute to this growth.
EssilorLuxottica SA offers a wide range of prescription lenses, including single vision lenses, progressive lenses, and reading glasses. These lenses are designed to correct various vision problems, such as nearsightedness, farsightedness, and presbyopia.
EssilorLuxottica SA designs and manufactures a variety of sunglasses, including polarized lenses, mirrored lenses, and prescription sunglasses. These sunglasses are designed to protect the eyes from UV rays and provide comfort and style.
EssilorLuxottica SA offers a range of contact lenses, including daily disposable lenses, monthly disposable lenses, and toric lenses. These lenses are designed to provide comfortable and convenient vision correction.
EssilorLuxottica SA designs and manufactures a wide range of optical frames, including acetate frames, metal frames, and hybrid frames. These frames are designed to hold prescription lenses and provide a stylish and comfortable fit.
EssilorLuxottica SA offers a range of sports eyewear, including goggles, glasses, and sunglasses designed for athletes. These products are designed to provide protection, comfort, and performance enhancement for athletes.
EssilorLuxottica SA operates in the eyewear industry, where there are substitute products such as contact lenses and refractive surgery. However, the company's strong brand portfolio and wide range of eyewear products mitigate the threat of substitutes.
EssilorLuxottica SA has a large customer base and a strong distribution network, which reduces the bargaining power of individual customers. Additionally, the company's products are often purchased through intermediaries such as optometrists and retailers, which further reduces customer bargaining power.
EssilorLuxottica SA relies on suppliers for raw materials such as lenses and frames. While the company has a large number of suppliers, some of them may have significant bargaining power due to their size and market share. However, the company has a strong supply chain management system, which mitigates the bargaining power of suppliers.
The eyewear industry has high barriers to entry, including high marketing and advertising costs, strong brand loyalty, and a large number of existing players. This makes it difficult for new entrants to compete with established companies like EssilorLuxottica SA.
The eyewear industry is highly competitive, with a large number of players competing for market share. EssilorLuxottica SA competes with other major players such as Luxottica Group, Essilor, and Hoyalux. The high competition leads to high marketing and advertising costs, which increases the intensity of rivalry.
| Value | |
|---|---|
| Debt Weight | 24.66% |
| Debt Cost | 4.28% |
| Equity Weight | 75.34% |
| Equity Cost | 8.17% |
| WACC | 7.21% |
| Leverage | 32.73% |
Value: 3.0
Growth: 4.2
Quality: 8.3
Yield: 7.5
Momentum: 6.5
Volatility: 9.3
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Value: 4.7
Growth: 2.2
Quality: 7.1
Yield: 6.9
Momentum: 9.0
Volatility: 7.7
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Value: 1.0
Growth: 5.8
Quality: 6.2
Yield: 3.1
Momentum: 8.0
Volatility: 6.7
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Value: 1.8
Growth: 4.0
Quality: 6.7
Yield: 6.2
Momentum: 0.0
Volatility: 8.3
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Value: 3.5
Growth: 8.8
Quality: 8.1
Yield: 5.0
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Value: 1.1
Growth: 5.7
Quality: 8.0
Yield: 3.1
Momentum: 2.5
Volatility: 5.0
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