Global Travel And Digital Publishing Will Boost Secular Growth

Key Takeaways

• Rapid ramp-up in travel retail and digital publishing is driving outsized revenue growth, margin expansion, and profitability through operational efficiency and recurring earnings.
  
• Enhanced financial flexibility enables value-creating acquisitions and strategic reallocations, positioning the company for leadership in fast-growing and consolidating markets.
  
• Heavy reliance on travel retail and physical publishing, weak digital strategy, and exposure to macroeconomic risks threaten Lagardère's long-term revenue growth and earnings stability.

Catalysts

Engages in content publishing, production, and broadcasting content media, entertainment, etc., and distribution of products and services in France, the United Kingdom, the United States, Canada, Spain, and internationally.

• Analyst consensus already expects growth from new travel retail concessions, but the ramp-up at major hubs like Amsterdam Schiphol is proving faster and more robust than anticipated, positioning Travel Retail for outsized revenue increases and higher-than-expected EBITDA well into 2026 as operational efficiencies scale.
  
• Analysts broadly agree on the margin benefits of growing digital format sales in publishing, yet these estimates may understate the structural profitability shift; with digital revenues approaching one-third in key markets and robust backlist monetization, net margins could expand even faster due to sustained cost advantages and recurring earnings streams.
  
• Structural debt reduction, major refinancing, and prudent cash management have created significant financial flexibility, setting the stage for value-accretive bolt-on M&A and potential share buybacks that could rapidly boost earnings per share and drive multiple expansion.
  
• Lagardère's deepening presence in premium travel retail and publishing in emerging markets, where rising discretionary income and demand for Western brands is accelerating, is positioned to unlock new high-growth geographies and deliver multi-year, above-market revenue growth.
  
• Accelerated portfolio reallocation away from structurally challenged segments, combined with data-driven cost optimization across all divisions, creates headroom for sustained operating margin expansion and positions Lagardère as a secular winner as media and retail industries consolidate.

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 4.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 2.3% today to 1.5% in 3 years time.
• The bullish analysts expect earnings to reach €153.6 million (and earnings per share of €2.61) by about August 2028, down from €212.0 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 42.1x on those 2028 earnings, up from 13.7x today. This future PE is greater than the current PE for the GB Media industry at 11.5x.
• Analysts expect the number of shares outstanding to grow by 0.68% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.22%, as per the Simply Wall St company report.

Lagardere Future Earnings Per Share Growth

Risks

• Lagardère remains heavily reliant on travel retail for revenue, making it acutely vulnerable to long-term shifts in global travel patterns and the risk of technological disruption from e-commerce and digital passport solutions, which could significantly pressure top-line revenue growth.
  
• The company's strong results this year were supported by specific successes in popular book releases and one-off events, but there are signs of slowing revenue in key publishing markets like Spain, Mexico, and France, indicating that overreliance on physical book publishing leaves Lagardère exposed to the structural decline driven by the accelerating shift to digital media, ultimately threatening margins and earnings stability in the long run.
  
• Despite mention of growing digital formats in publishing, there is little evidence in the discussion of major investments or a compelling proprietary digital distribution strategy, raising concerns that lagging digital innovation may erode Lagardère's market share and reduce its ability to grow future earnings amid intensifying competition from digital-first giants such as Amazon and Apple.
  
• Weak performance in the Prisma Media segment, with revenues down and EBITDA hit by restructuring costs and declining digital sales in part due to generative AI, highlights the ongoing industry-wide decline in print advertising revenues and slow monetization of digital content-both factors likely to limit overall group revenue and net profit in the coming years.
  
• Persistent macroeconomic and geopolitical risks-such as inflation, fluctuating exchange rates, and stagnating or volatile international travel, especially in crucial markets like China and North America-underscore continued vulnerability to external shocks, with currency impacts and shifting consumer demand posing downside risk for both revenue and net margins.

Valuation

• The assumed bullish price target for Lagardere is €34.5, 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 €34.5, 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 €10.3 billion, earnings will come to €153.6 million, and it would be trading on a PE ratio of 42.1x, assuming you use a discount rate of 9.2%.
  
• Given the current share price of €20.5, the bullish analyst price target of €34.5 is 40.6% 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.