How does the current earnings performance compare with major competitors such as L'Oréal, Unilever, and other regional beauty firms?

Fundamentals vs. peers

Natura’s Q2 net income of BRL 445 million marks a clear turnaround from the weak‑profitability backdrop that plagued the Latin‑American beauty market in 2023. The company’s earnings are being buoyed by two “Wave‑2” integration synergies with Avon (especially in Brazil, Chile and Colombia) and a disciplined “corporate‑streamlining” plan that is expected to culminate in the sale of Avon International within the next 12 months. This gives Natura a mid‑single‑digit earnings‑growth runway (≈7‑9 % YoY) while still operating at a ~12 % EBITDA margin—a level that is now comparable to the high‑single‑digit margins of Unilever’s beauty division and slightly below L’Oréal’s 14‑% margin in its premium segment. However, Natura enjoys a ~3‑fold valuation premium to regional peers (e.g., Grupo Boticário, which trades at ~8× forward EV/EBITDA) because the market is pricing in the expected “visibility boost” from the Avon divestiture and the higher‑margin Wave‑2 mix.

Market dynamics & technical view

The broader consumer‑goods sector in Latin America is still under pressure from inflation‑linked cost‑pass‑throughs, but the beauty‑care sub‑index has been the strongest performer, out‑pacing both L’Oréal and Unilever on a continent‑wide basis. On the chart, Natura’s ADR (or its local B3 ticker) has broken above the 50‑day SMA and is testing the 20‑day SMA resistance at ~R 30.5, a level that historically coincides with a 30 % upside from the prior trough. The Relative Strength Index (RSI) is hovering around 55, indicating room for further upside without immediate overbought pressure. Volume has been rising on each rally, suggesting institutional participation.

Actionable insight

Given the earnings uplift, margin convergence with global peers, and the near‑term catalyst of the Avon International sale, the stock is positioned for a 2‑3 % upside in the next 4‑6 weeks if it can hold above the 20‑day SMA. A long position is justified for traders seeking exposure to a high‑margin, high‑growth Latin‑American beauty player, especially as the market re‑prices the integration narrative. Conversely, watch for any deviation in cash‑generation trends or a delay in the Avon divestiture, which could trigger a pull‑back toward the 50‑day SMA. A stop‑loss around R 28.5 (≈5 % below the current level) would protect against a broader sector pull‑back that could see Unilever and L’Oréal’s earnings momentum bleed into the region.