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Estée Lauder (EL)
:EL
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The Estée Lauder Companies
(NYSE:EL)50Neutral
Positive Factors
Innovation and Growth Strategy
EL's innovation pipeline, investments in digital capabilities, improved distribution channel mix, and enhanced supply chain are set to help regain market share and drive long-term growth.
Operational Strategy
Management's shift in focus towards other growth channels, such as travel retail in the West and online, is appreciated by investors as it aims to diversify and reduce concentration risk.
Negative Factors
Market and Economic Conditions
Weak sales outlook for fiscal year 2025 is driven by slow demand recovery in Mainland China, Asia travel retail, and North America.
Profitability Challenges
Estee Lauder's topline is under pressure, operating margins are in the single-digit range, and there is a need for increased reinvestments in the business.
The Estée Lauder Companies (EL) vs. S&P 500 (SPY)
Market Cap
$24.49B
Dividend Yield2.88%
Average Volume (3M)4.62M
Price to Earnings (P/E)147.3
Beta (1Y)1.10
Revenue Growth0.07%
EPS Growth-249.21%
CountryUS
Employees62,000
SectorConsumer Cyclical
Sector Strength53
IndustryConsumer Products - Household & Personal
Share Statistics
EPS (TTM)-1.95
Shares Outstanding234,173,420
10 Day Avg. Volume3,449,025
30 Day Avg. Volume4,623,033
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.66
Price to Cash Flow (P/CF)6.00
P/FCF Ratio6.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$77.43Price Target Upside13.72% Upside
Rating ConsensusHold
Number of Analyst Covering22
The Estée Lauder Companies Business Overview & Revenue Model
Company DescriptionFounded in 1946, New York-based Estée Lauder Companies, Inc. manufactures and sells skin care, makeup, fragrance and hair care products. It offers its products through department stores, specialty multi-brand retailers, upscale perfumeries and pharmacies, and prestige salons and spas, under the Estée Lauder, Clinique, Origins, MžAžC, Bobbi Brown, La Mer, Jo Malone London, Aveda, and Too Faced brands.
How the Company Makes MoneyThe Estée Lauder Companies generates revenue primarily through the sale of its diverse range of beauty and personal care products. The company's revenue model is centered around three main product categories: skincare, makeup, and fragrance, with skincare being the largest contributor to its earnings. Estée Lauder distributes its products through various channels, including physical retail stores, online platforms, and travel retail locations, which cater to international travelers. A significant portion of its sales comes from department stores and specialty retailers, as well as through its own brand boutiques and e-commerce sites. The company also benefits from strategic partnerships and collaborations with influencers and celebrities to enhance brand visibility and appeal. Moreover, Estée Lauder invests in research and development to innovate and introduce new products, which helps drive consumer interest and sales growth.
The Estée Lauder Companies Financial Statement Overview
Summary
The Estée Lauder Companies face significant financial challenges, as indicated by declining revenues, negative profitability, and high leverage. Despite a robust gross profit margin and positive cash flows, the company needs to address its net losses and leverage to improve its financial health. Maintaining cash flow strength while targeting revenue growth and profitability will be crucial for future stability.Income Statement
The Estée Lauder Companies experienced a challenging period with a TTM net loss indicating profitability issues. The gross profit margin remains strong at approximately 73% in TTM, showing efficient cost management. However, the negative net profit margin of around -4.6% highlights substantial profitability challenges. EBIT and EBITDA margins have diminished significantly compared to prior years, reflecting operational difficulties. Revenue has declined compared to the previous period, decreasing by 3.0%, suggesting sales pressure.45
Neutral
Balance Sheet
The company's balance sheet reveals a high debt-to-equity ratio of approximately 2.25 in TTM, indicating significant leverage and potential financial risk. The equity ratio stands at around 21.1%, suggesting a moderate equity position. Return on equity is negative at about -16.8%, reflecting recent financial struggles. The decline in stockholders' equity over time also raises concerns about financial stability.55
Neutral
Cash Flow
The Estée Lauder Companies demonstrate a positive free cash flow with a notable free cash flow to net income ratio, signifying effective cash generation despite net losses. The operating cash flow to net income ratio is positive, reinforcing operational cash flow strength. However, the free cash flow has decreased compared to the prior year, indicating a need for careful cash management amidst declining profitability.60
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 15.16B | 15.61B | 15.91B | 17.74B | 16.21B | 14.29B | Gross Profit |
| 11.08B | 11.18B | 11.35B | 13.43B | 12.38B | 10.74B | EBIT |
| 102.00M | 970.00M | 1.51B | 3.17B | 3.90B | 2.71B | EBITDA |
| 589.00M | 1.98B | 2.35B | 3.79B | 3.66B | 2.71B | Net Income Common Stockholders |
| -700.00M | 390.00M | 1.01B | 2.39B | 2.87B | 684.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.40B | 3.40B | 4.03B | 3.96B | 4.96B | 5.02B | Total Assets |
| 21.68B | 21.68B | 23.41B | 20.91B | 21.97B | 17.78B | Total Debt |
| 9.83B | 9.83B | 10.17B | 7.64B | 8.10B | 8.79B | Net Debt |
| 6.43B | 6.43B | 6.14B | 3.69B | 3.14B | 3.77B | Total Liabilities |
| 16.36B | 16.36B | 17.00B | 14.48B | 15.02B | 13.82B | Stockholders Equity |
| 5.31B | 5.31B | 5.58B | 5.59B | 6.09B | 3.96B |
| Cash Flow | Free Cash Flow | ||||
| 1.15B | 1.44B | -1.56B | 2.00B | 2.99B | 1.66B | Operating Cash Flow |
| 1.81B | 2.36B | 1.73B | 3.04B | 3.63B | 2.28B | Investing Cash Flow |
| -1.44B | -960.00M | -3.22B | -945.00M | -1.86B | -1.70B | Financing Cash Flow |
| -1.69B | -2.04B | 1.52B | -3.04B | -1.89B | 1.46B |
The Estée Lauder Companies Technical Analysis
Negative
68.09
Price Trends
74.04
Negative
75.70
Negative
88.54
Negative
Market Momentum
-1.04
Positive
39.54
Neutral
20.89
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EL, the sentiment is Negative. The current price of 68.09 is below the 20-day moving average (MA) of 69.94, below the 50-day MA of 74.04, and below the 200-day MA of 88.54, indicating a bearish trend. The MACD of -1.04 indicates Positive momentum. The RSI at 39.54 is Neutral, neither overbought nor oversold. The STOCH value of 20.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EL.
The Estée Lauder Companies Risk Analysis
The Estée Lauder Companies disclosed 18 risk factors in its most recent earnings report. The Estée Lauder Companies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
The Estée Lauder Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $406.08B | 27.59 | 30.25% | 2.29% | 0.49% | 5.02% | |
73 Outperform | $148.52B | 23.28 | 28.73% | 3.21% | 1.99% | -10.59% | |
63 Neutral | $393.80M | ― | -22.50% | 3.13% | -12.04% | -1796.38% | |
62 Neutral | $3.60B | 38.02 | 15.17% | ― | 46.27% | -26.45% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
57 Neutral | $4.96B | 40.12 | 0.27% | ― | 1.35% | -99.94% | |
50 Neutral | $24.49B | 147.29 | -14.17% | 2.88% | 0.07% | -249.21% |
* Consumer Cyclical Sector Average
Performance Comparison
EL
The Estée Lauder Companies
68.09
-75.98
-52.74%
NUS
Nu Skin
7.66
-4.58
-37.42%
PG
Procter & Gamble
173.18
17.70
11.38%
UL
Unilever
58.02
10.53
22.17%
COTY
Coty
5.52
-7.06
-56.12%
ELF
e.l.f. Beauty
63.93
-137.69
-68.29%
The Estée Lauder Companies Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -17.34% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a company in transition, with significant strategic initiatives aimed at restoring growth and profitability. While there are notable achievements in innovation and market expansion, major challenges remain, particularly in Asia. The sentiment is balanced between optimism for strategic changes and concern over current market pressures.Highlights
Transformative Strategic Vision: Beauty Reimagined
Estée Lauder introduced a new strategic vision named 'Beauty Reimagined', focusing on restoring sustainable sales growth and achieving a solid double-digit adjusted operating margin over the next few years. This involves a major transformation aimed at increasing agility and consumer focus.
PRGP Progress and Expansion
The Profit Recovery and Growth Plan (PRGP) has seen significant progress, delivering over 60% of the fiscal 2025 objective in the first half of the fiscal year. The plan has been expanded to address new challenges and further optimize operational efficiencies.
Innovation and Consumer-Facing Investments
Estée Lauder is committed to tripling the percentage of innovation launched within a year and increasing consumer-facing investments, including visible advertising and optimizing marketing programs.
Successful Brand Launches and Market Expansions
Brands like Clinique and The Ordinary have successfully launched on platforms such as Amazon's U.S. Premium Beauty stores, leading to significant market share gains.
AI Integration for Efficiency
The company is implementing AI across various functions, from demand forecasting to marketing, to improve efficiency and decision-making.
Lowlights
Decline in Organic Net Sales
Organic net sales declined by 6% in the second quarter, primarily impacted by challenges in the Asia Pacific region, particularly in China, Korea, and Hong Kong.
Challenges in Asia Travel Retail
Retail sales trends in Asia travel retail, especially in Korea, have been weak, significantly pressuring organic net sales and leading to a challenging third quarter outlook.
Impairment Charges
The company recorded $861 million of impairment charges related to TOM FORD and Too Faced, reflecting ongoing challenges in Asia Pacific and the Asia travel retail business.
Restructuring and Workforce Reduction
The expanded PRGP includes a restructuring program that will result in a global reduction of 5,800 to 7,000 positions.
Company Guidance
During The Estée Lauder Companies' Second Quarter Fiscal 2025 earnings call, CEO Stéphane de La Faverie and CFO Akhil Shrivastava outlined the company's strategic vision, "Beauty Reimagined," aimed at restoring sustainable sales growth and achieving a solid double-digit adjusted operating margin over the next few years. Key metrics presented included a 6% decline in organic net sales for the quarter, with adjusted EPS at $0.62, surpassing expectations. The company has initiated the largest operational transformation in its history, expecting to achieve annual gross savings of $800 million to $1 billion through the expanded Profit Recovery and Growth Plan (PRGP). This plan includes a global reduction of 5,800 to 7,000 positions, with the restructuring program expected to generate $1.2 billion to $1.6 billion in charges. Looking ahead, the company anticipates a 10% to 8% decrease in organic net sales for the third quarter, particularly impacted by a double-digit decline in their global travel retail business.The Estée Lauder Companies Corporate Events
Executive/Board Changes
Ronald S. Lauder to Retire from Estée Lauder Board
Neutral
Jan 10, 2025
Ronald S. Lauder has announced his retirement from the Board of Directors of The Estée Lauder Companies effective January 10, 2025, after serving since 2016. The decision was not due to any disagreements, and he will continue as Chairman of Clinique Laboratories LLC. Eric Zinterhofer has been elected as a Class II director to replace him. Mr. Zinterhofer, a founding partner of Searchlight Capital Partners and son-in-law of Mr. Lauder, will be succeeding him under the Stockholders’ Agreement. The agreement, which involves the Lauder family’s significant voting power, ensures continuity in the board’s composition and maintains the family’s influence within the company.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.