Stock Analysis & Valuation Lagardere S.A. (MMB.SW)

• Previous Close: CHF32.48
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula	20.20	-38

Strategic Investment Analysis

Company Overview

Lagardere SA (MMB.SW) is a diversified media and travel retail conglomerate headquartered in Paris, France. Operating through its two core divisions—Lagardère Publishing and Lagardère Travel Retail—the company has a strong global footprint. The Publishing division is a leader in book and e-publishing, covering education, general literature, and youth works in multiple languages. Meanwhile, the Travel Retail division dominates transit hubs with nearly 3,000 stores under brands like Relay, Aelia Duty Free, and The Fashion Gallery, alongside partnerships with high-profile names such as Hermès, Nespresso, and Burger King. Lagardere also owns influential media assets, including Europe 1 radio, Paris Match magazine, and the Elle brand. With a heritage dating back to 1826, Lagardere combines legacy media influence with modern retail innovation, positioning itself as a key player in both the consumer cyclical and travel services sectors. Its diversified revenue streams—spanning publishing royalties, advertising, retail concessions, and digital services—make it resilient against sector-specific downturns.

Investment Summary

Lagardere SA presents a mixed investment profile. Strengths include its diversified revenue streams, strong brand portfolio in travel retail (high-margin duty-free operations), and a resilient publishing arm with steady royalties. However, the company carries significant debt (€4.9B), which could pressure liquidity amid rising interest rates. The travel retail segment is highly sensitive to global passenger traffic, exposing it to macroeconomic and geopolitical risks. While the stock’s beta of 0.79 suggests lower volatility than the market, the modest net income margin (~1.9%) and high leverage warrant caution. The dividend yield (~2.3% based on current price) offers modest income appeal. Investors should weigh its recovery potential in post-pandemic travel against structural challenges in traditional media.

Competitive Analysis

Lagardere’s competitive advantage lies in its dual focus on niche publishing and high-traffic travel retail, creating synergies (e.g., cross-promoting media content in transit hubs). In publishing, it benefits from a deep backlist of educational and literary titles, generating recurring revenue. The travel retail division’s prime locations in airports and train stations provide a captive audience, with concessions often operating as monopolies in their spaces. However, competition is intense: in publishing, digital disruptors like Amazon (self-publishing platforms) and educational tech firms erode traditional margins, while in travel retail, Dufry and Heinemann vie for the same high-value concessions. Lagardere’s media assets (Elle, Europe 1) face declining ad revenues amid digital migration. Its scale in travel retail is a moat, but reliance on tourism demand makes it cyclical. The company’s ability to secure long-term airport contracts and adapt its publishing arm to digital trends will be critical to maintaining its edge.

Major Competitors

• Dufry AG (DUFN.SW): Dufry is the global leader in travel retail, specializing in duty-free shops. It operates in over 60 countries, with a larger footprint than Lagardere but less diversification into media. Strengths include economies of scale and exclusive airport contracts. Weaknesses include higher debt levels and pure-play exposure to travel retail, making it more vulnerable to tourism downturns.
• RELX plc (REL.L): RELX dominates scientific, technical, and medical publishing, a more profitable niche than Lagardere’s generalist approach. Its Elsevier unit is a cash cow with high margins. However, RELX lacks Lagardere’s consumer media brands or travel retail diversification, focusing instead on B2B data analytics—a less cyclical but lower-growth model.
• Pernod Ricard SA (PRNDY): Though primarily a spirits company, Pernod Ricard competes indirectly via its travel retail liquor sales. Its premium brands (e.g., Absolut, Chivas) benefit from Lagardere’s duty-free channels, but Pernod relies on third-party retailers like Lagardere rather than operating its own stores. Its higher margins and brand power offset reliance on partners.
• WPP plc (WPP.L): WPP competes in advertising, a segment Lagardere serves via its media properties. WPP’s global ad network and digital capabilities outpace Lagardere’s traditional radio/magazine ads. However, WPP lacks Lagardere’s owned content (Elle, Paris Match) or retail revenue, making it more vulnerable to ad spend cyclicality.