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Estée Lauder (EL)
NYSE:EL
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The Estée Lauder Companies
(NYSE:EL)
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Rating:55Neutral
Price Target:
$117.00
▲(2.42% Upside)
Action:ReiteratedDate:02/06/26
The score is held back primarily by weakened financial performance (losses, very thin operating margin, and elevated leverage) and a technically weak setup (trading below key moving averages with low RSI). Offsetting these risks, the latest earnings call was constructive with raised FY2026 guidance, demonstrated margin expansion, and improved cash flow, while valuation is mixed due to the negative P/E and only modest dividend support.
Positive Factors
Strong Gross Margin & Free Cash Flow
Sustained high gross margins and positive free cash flow support reinvestment in innovation and marketing without immediate reliance on new financing. Over 2–6 months this underpins stability while management executes turnaround plans and funds restructuring and channel shifts.
Upgraded Guidance & Margin Recovery
Management raising full‑year guidance and forecasting meaningful operating margin expansion signals improving underlying operations and cost discipline. This reflects durable operational leverage that should drive earnings recovery and cash flow improvement over the medium term.
Brand, Channel Momentum & Faster Innovation
Accelerating innovation share and strong brand/channel performance (notably China and online) indicate structural revenue drivers. Faster product cycles and digital/China growth improve resilience and long‑term top‑line mix toward higher‑margin skincare and prestige segments.
Negative Factors
Elevated Leverage
High leverage limits financial flexibility and raises refinancing and interest‑rate risk, especially while earnings are weak. Over the next several months debt servicing constrains cash allocation to growth, elevating vulnerability to execution slippage or macro shocks.
Weak Profitability
Despite healthy gross margins, collapsing operating profits and a negative net income base indicate structural cost or mix issues. Sustained low operating margins limit capacity to fund marketing and innovation internally and increase reliance on cost programs to restore returns.
Large Restructuring & Operational Disruption
Significant restructuring charges and ongoing channel migrations create execution risk and consume cash and management bandwidth. Transitional costs and retail/platform shifts can pressure margins and inventory dynamics for several quarters, slowing the recovery pace.
The Estée Lauder Companies (EL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$40.37B
Dividend Yield1.3%
Average Volume (3M)4.20M
Price to Earnings (P/E)―
Beta (1Y)1.22
Revenue Growth-6.36%
EPS Growth-554.84%
CountryUS
Employees44,020
SectorConsumer Defensive
Sector Strength42
IndustryHousehold & Personal Products
Share Statistics
EPS (TTM)0.87
Shares Outstanding247,219,700
10 Day Avg. Volume3,691,666
30 Day Avg. Volume4,197,719
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)7.53
Price to Sales (P/S)2.04
P/FCF Ratio43.43
Enterprise Value/Market Cap1.21
Enterprise Value/Revenue3.32
Enterprise Value/Gross Profit4.47
Enterprise Value/Ebitda30.75
Forecast
1Y Price Target
$110.86Price Target Upside-2.95% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering22
EPS Forecast (FY)2.23
Revenue Forecast (FY)$14.99B
The Estée Lauder Companies Business Overview & Revenue Model
Company DescriptionThe Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The company offers a range of skin care products, including moisturizers, serums, cleansers, toners, body care, exfoliators, acne care and oil correctors, facial masks, cleansing devices, and sun care products; and makeup products, such as lipsticks, lip glosses, mascaras, foundations, eyeshadows, nail polishes, and powders, as well as compacts, brushes, and other makeup tools. It also provides fragrance products in various forms comprising eau de parfum sprays and colognes, as well as lotions, powders, creams, candles, and soaps; and hair care products that include shampoos, conditioners, styling products, treatment, finishing sprays, and hair color products, as well as sells ancillary products and services. The company offers its products under Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, By Kilian, BECCA, Too Faced, Dr. Jart+, DECIEM, and The Ordinary brands. It also holds license arrangements for Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors, and Ermenegildo Zegna brands. The company sells its products through department stores, specialty-multi retailers, upscale perfumeries and pharmacies, and salons and spas; freestanding stores; its own and authorized retailer websites; third-party online malls; stores in airports; and in-flight and duty-free shops. The company was founded in 1946 and is headquartered in New York, New York.
How the Company Makes MoneyThe Estée Lauder Companies generates revenue primarily through the sale of its beauty products across multiple channels, including department stores, specialty retailers, e-commerce platforms, and direct-to-consumer sales. Key revenue streams include skincare, makeup, fragrance, and hair care products, with skincare being the largest segment. The company benefits from strong brand recognition and loyalty, which allows it to command premium pricing. Additionally, strategic partnerships with retailers and e-commerce platforms enhance distribution and accessibility, contributing to sales growth. Seasonal promotions, product launches, and collaborations with influencers and celebrities also play a significant role in driving revenue. Furthermore, the company's focus on expanding its presence in emerging markets and investing in digital innovation positions it for continued financial success.
The Estée Lauder Companies Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue from different business segments, highlighting which product lines or services are driving growth and which may need strategic adjustments.
Analyzes revenue from different business segments, highlighting which product lines or services are driving growth and which may need strategic adjustments.
Data provided by:
The Fly
The FlyThe Estée Lauder Companies Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:May 01, 2026
Earnings Call Sentiment Positive
The call presented multiple clear operational and financial improvements: revenue growth (4% organic), significant margin expansion, strong EPS and cash-flow gains, raised FY guidance, faster innovation cadence, and concrete brand- and channel-level wins (notably in China and online). Offsetting these positives are meaningful near-term costs and disruptions: a large restructuring charge (~$904M) and short-term migration costs related to the PRGP, travel-retail and Beijing/Shanghai online platform transitions, continued makeup category weakness, and regional softness in parts of Europe and Latin America. Management communicated confidence in the turnaround, emphasized PRGP benefits, and raised guidance while acknowledging the remaining execution work and transitory headwinds.Q2-2026 Updates
Positive Updates
Quarterly Organic Net Sales Growth
Organic net sales grew 4% year-over-year in Q2, led by skincare and fragrance (each +6%), with retail sales trend improving from down 4% in Q1 to flat in Q2 and retail sales +4% in the first half excluding travel retail.
Strong Margin Expansion
Operating margin expanded to 14.4% from 11.5% a year ago, an improvement of 290 basis points; gross margin was 76.5%, up 40 basis points, driven by PRGP benefits and improved sales leverage.
Significant EPS and Cash Flow Improvement
Diluted EPS rose 43% to $0.89 (from $0.62). Net cash provided by operating activities for the six months improved to $785 million versus $387 million a year ago.
Raised Full-Year Outlook
Fiscal 2026 guidance was raised and narrowed: full-year organic net sales growth now expected +1% to +3%; operating margin guidance raised to approximately 9.8%–10.2%; diluted EPS guidance increased to about $2.25–$2.50 (implying ~36%–49% growth, ~43% at midpoint).
Portfolio & Channel Momentum — China and Online
Mainland China delivered double-digit organic growth and market share gains (brands highlighted: La Mer, Tom Ford, Estée Lauder); Hainan grew high single digits. Online first-half organic sales grew high single digits and online is on track to exceed the prior-year 31% of reported sales.
Breakthrough and Faster Innovation
The company is accelerating speed-to-market: innovation is on track to represent at least 25% of sales in fiscal 2026, with 19% of innovation launching in <1 year (above prior 16% expectation) and a target to raise that percentage toward 30%.
Brand-Level Outperformance
Notable brand performance: The Ordinary delivered strong double-digit retail sales growth; Tom Ford, La Mer, Le Labo, and Aveda posted strong double-digit organic growth or breakout product success (e.g., Aveda's Miraculous Oil). Estee Lauder's Double Wear Concealer ranked top new prestige makeup product for calendar 2025.
PRGP and Cost Discipline Driving Results
Ongoing PRGP (profit recovery and growth plan) contributed to net benefits including operational efficiencies and inventory reductions; non-consumer-facing expenses were reduced (3% reduction noted) while consumer-facing investment increased 7% to support growth.
Negative Updates
Travel Retail Disruption and Near-Term Headwinds
Transition of duty-free retailers and online platforms servicing Beijing and Shanghai (transfer from Sunrise to CDF/OneFuji/Avolta) created disruption; company expects a transitory headwind in the second half related to Asia travel retail and related online businesses.
Large Restructuring Charges and Short-Term Costs
Cumulative restructuring charges recorded through Dec 31 total $904 million (primarily employee-related). The enterprise business services transformation and outsourcing will generate professional fees, employee costs and contract-termination charges, and the company expects near-term cost pressure while operating in parallel during migration.
Makeup Category Underperformance
Makeup profitability remains challenged and was close to breakeven in the quarter; Q3 profitability was further impacted by returns related to innovation, and management acknowledges additional work is required to restore makeup margins and scale.
Regional Weakness — Western Europe & Latin America
Western Europe faces a challenging macroeconomic environment with subdued consumer sentiment in markets such as France and Germany; Latin America showed slowing consumer demand with tariff-related headwinds hurting confidence.
Tax and Mix Headwinds
Quarterly effective tax rate was 39.8% (down from 42.6%) but the company noted an estimated unfavorable impact from recent U.S. tax legislation and a higher effective tax rate on foreign operations due to new valuation allowances (primarily Latin America). Business mix and tariffs also presented headwinds to gross margin that PRGP helped offset.
Near-Term Investment-Driven Margin Pressure
Management indicated third-quarter operating margin contraction of ~50 basis points versus last year due to stepped-up consumer-facing investments behind a heavy innovation schedule and tariff headwinds, even as full-year margin guidance was raised.
Channel Transition Complexity and Inventory Dynamics
Rapid rebalancing of distribution (department stores to specialty multi, Amazon, DTC and TikTok Shop) and differing contractual/media treatments can cause gaps between sell-in and sell-out metrics; Q1 had a ~5-point gap that narrowed in Q2 but channel shifts still require careful inventory and promotional management.
Company Guidance
The Company raised its fiscal 2026 outlook, now expecting full‑year organic net sales growth of 1%–3% (midpoint ~2%), operating margin of 9.8%–10.2% (up from a prior 9.4%–9.9%) and diluted EPS of roughly $2.25–$2.50 (weighted average shares ~365M), implying year‑over‑year EPS growth of ~36%–49% (midpoint ~43%); management also expects operating margin expansion of roughly 165–200 basis points at the midpoint, second‑half organic sales to increase low single digits with stronger Q4 vs Q3 (Q3 expected to contract ~50 bps year‑over‑year due to consumer investments and tariffs), and continued PRGP benefits (cumulative restructuring charges recorded through Dec. 31 were $904M) while six‑month operating cash flow was $785M and CapEx was down ~25% year‑over‑year.The Estée Lauder Companies Financial Statement Overview
Summary
Gross margin remains strong (~74%) and free cash flow is positive (~$1.14B TTM), but profitability has deteriorated materially (net income negative; EBIT margin ~1%) and leverage is elevated (debt-to-equity ~2.23), increasing risk until earnings recover.Income Statement
TTM (Trailing-Twelve-Months) revenue is slightly higher (about $14.7B) and gross margin remains strong (~74%), but profitability has deteriorated materially: net income is negative and operating profitability is thin (EBIT margin ~1%). Looking back, results show a clear downshift from strong earnings in 2021–2022 to much weaker performance in 2024 and losses in 2025, indicating pressure on pricing, costs, and/or demand despite still-healthy gross profit generation.34
Negative
Balance Sheet
Leverage is elevated with debt running well above equity (TTM debt-to-equity ~2.23), limiting flexibility at a time when earnings are weak and return on equity is negative. While the company maintains a sizable asset base (~$19.6B TTM), the combination of higher leverage versus prior years and depressed profitability increases balance-sheet risk until margins and earnings recover.41
Neutral
Cash Flow
Cash generation is a relative bright spot: TTM operating cash flow is solid (~$1.67B) and free cash flow is positive (~$1.14B) with strong growth versus the prior period. However, cash flow has been volatile over the cycle (including negative free cash flow in 2023), and with net income currently negative, the quality-of-earnings picture is mixed even though free cash flow remains positive.63
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.68B | 14.29B | 15.61B | 15.91B | 17.74B | 16.21B |
| Gross Profit | 10.91B | 10.56B | 11.18B | 11.35B | 13.43B | 12.38B |
| EBITDA | 1.59B | 193.00M | 1.98B | 2.40B | 3.93B | 4.16B |
| Net Income | -178.00M | -1.13B | 390.00M | 1.01B | 2.39B | 2.87B |
Balance Sheet | ||||||
| Total Assets | 19.63B | 19.89B | 21.68B | 23.41B | 20.91B | 21.97B |
| Cash, Cash Equivalents and Short-Term Investments | 3.08B | 2.92B | 3.40B | 4.03B | 3.96B | 4.96B |
| Total Debt | 11.04B | 9.44B | 9.83B | 10.17B | 7.64B | 8.10B |
| Total Liabilities | 15.60B | 16.03B | 16.36B | 17.00B | 14.48B | 15.02B |
| Stockholders Equity | 4.03B | 3.87B | 5.31B | 5.58B | 5.59B | 6.06B |
Cash Flow | ||||||
| Free Cash Flow | 1.14B | 670.00M | 1.44B | -1.56B | 2.00B | 2.99B |
| Operating Cash Flow | 1.67B | 1.27B | 2.36B | 1.73B | 3.04B | 3.63B |
| Investing Cash Flow | -558.00M | -644.00M | -1.71B | -3.22B | -960.00M | -1.86B |
| Financing Cash Flow | -664.00M | -1.12B | -1.29B | 1.59B | -3.02B | -1.89B |
The Estée Lauder Companies Technical Analysis
Positive
114.23
Price Trends
109.84
Positive
101.70
Positive
91.23
Positive
Market Momentum
<0.01
Negative
56.37
Neutral
92.09
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EL, the sentiment is Positive. The current price of 114.23 is above the 20-day moving average (MA) of 110.82, above the 50-day MA of 109.84, and above the 200-day MA of 91.23, indicating a bullish trend. The MACD of <0.01 indicates Negative momentum. The RSI at 56.37 is Neutral, neither overbought nor oversold. The STOCH value of 92.09 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.24B | 19.77 | 19.95% | 3.80% | 3.12% | 9.01% | |
74 Outperform | $364.54B | 23.24 | 31.58% | 2.92% | 1.23% | 17.97% | |
69 Neutral | $156.18B | 22.99 | 32.63% | 3.74% | -0.30% | -14.60% | |
64 Neutral | $5.20B | 51.51 | 10.77% | ― | 13.80% | -25.02% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
55 Neutral | $40.37B | -223.35 | -4.34% | 1.30% | -6.36% | -554.84% | |
51 Neutral | $2.30B | -4.22 | -14.50% | ― | -5.68% | -358.36% |
* Consumer Defensive Sector Average
EL
The Estée Lauder Companies
114.23
40.43
54.78%
IPAR
Inter Parfums
103.41
-30.46
-22.75%
PG
Procter & Gamble
160.78
-5.21
-3.14%
UL
Unilever
73.23
14.89
25.52%
COTY
Coty
2.69
-3.30
-55.09%
ELF
e.l.f. Beauty
94.02
18.67
24.78%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.