Emerging Travel Mobility And Digital Publishing Will Reshape Consumer Experiences

Key Takeaways

• Early expansion in high-growth travel retail locations and diversification outside France position Lagardère for compound revenue growth and reduced regional exposure.
  
• Accelerated digital publishing adoption and major partnerships are set to sharply boost high-margin revenue and group profitability beyond market expectations.
  
• Lagardère's dependence on traditional print and travel retail, slow digital adaptation, and high fixed costs expose it to shifting consumer habits and declining profitability.

Catalysts

Engages in content publishing, production, broadcasting, and distribution businesses in France, the United Kingdom, the United States, Spain, and internationally.

• While analysts broadly agree that the expansion of Travel Retail and recovery in passenger flows will drive steady revenue and operating leverage, this underestimates the compounding impact from structurally higher global mobility in emerging markets and Lagardère's early investments in high-growth locations, which could underpin double-digit annualized revenue growth and material margin expansion well above past cycles.
  
• Whereas analyst consensus expects digital publishing and audiobooks to steadily support elevated margins, the rapid acceleration in digital adoption-especially via transformative partnerships like Spotify and further international rollout-positions Lagardère to quickly surpass peers in digital penetration, unlocking recurring, high-margin digital revenue streams and sharply boosting group profitability.
  
• Lagardère's increasing international diversification-now with over two-thirds of publishing revenue outside France and new transport retail contracts in untapped geographies-substantially reduces regional risk and positions the group to capture outsize gains as global travel and literacy trends fuel long-term, compound revenue growth.
  
• The company's commitment to sustained investment in omnichannel retail and logistics automation (visible in rising CapEx and ambitious modernization plans, particularly in book distribution) is poised to drive ongoing net margin improvement through higher operational efficiency and scale advantages.
  
• Enhanced monetization of intellectual property-including the scaling of board games, live entertainment, and cross-media adaptations-positions Lagardère to further capitalize on premium, experience-driven consumption and recurring royalty streams, supporting outsized earnings and durable free cash flow growth.

Lagardere Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Lagardere compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Lagardere's revenue will grow by 4.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 1.9% today to 1.1% in 3 years time.
• The bullish analysts expect earnings to reach €108.3 million (and earnings per share of €2.64) by about July 2028, down from €168.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 61.2x on those 2028 earnings, up from 17.3x today. This future PE is greater than the current PE for the GB Media industry at 12.1x.
• Analysts expect the number of shares outstanding to grow by 0.21% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.03%, as per the Simply Wall St company report.

Lagardere Future Earnings Per Share Growth

Risks

• Lagardère's heavy reliance on traditional publishing and airport travel retail leaves it exposed to long-term secular declines in print media consumption and potential shocks to global travel patterns, which could threaten both revenue stability and long-term earnings growth.
  
• The gradual shift in consumer habits toward digital and paperless formats may erode demand for physical books and airport retail offerings, slowing revenue growth for Lagardère's core business segments over time.
  
• The company's relatively slow pace of digital innovation, especially in Publishing outside the U.S. and U.K., risks allowing more tech-savvy competitors to capture digital market share, which could put sustained pressure on Lagardère's revenue and net margins.
  
• High fixed costs tied to legacy operations-including print infrastructure and physical retail locations-could make it challenging for Lagardère to preserve profitability and maintain flexible operating margins as the industry evolves and faces further disruption.
  
• Industry consolidation and the increasing dominance of large tech firms in media content distribution may further reduce Lagardère's bargaining power with both advertisers and platforms, accelerating the decline of traditional advertising revenue streams and impacting overall profitability.

Valuation

• The assumed bullish price target for Lagardere is €36.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Lagardere's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €36.0, and the most bearish reporting a price target of just €23.5.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €10.2 billion, earnings will come to €108.3 million, and it would be trading on a PE ratio of 61.2x, assuming you use a discount rate of 9.0%.
• Given the current share price of €20.6, the bullish analyst price target of €36.0 is 42.8% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.