The Estée Lauder Companies (EL) AI Stock Analysis

• Market Cap: $19.87B
• Dividend Yield: 3.4%
• Average Volume (3M): 4.32M
• Price to Earnings (P/E): 147.3
• Beta (1Y): 1.22
• Revenue Growth: 0.07%
• EPS Growth: -249.21%
• Country: US
• Employees: 44,020
• Sector: Consumer Cyclical
• Sector Strength: 67
• Industry: Household & Personal Products
• EPS (TTM): 0.62
• Shares Outstanding: 234,173,420
• 10 Day Avg. Volume: 6,678,925
• 30 Day Avg. Volume: 4,324,172
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.59
• Price to Cash Flow (P/CF): 5.70
• P/FCF Ratio: 5.70
• Enterprise Value/Market Cap: 1.70
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 3.02
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $68.41
• Price Target Upside: 14.09% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 19

Estée Lauder's stock is currently facing significant challenges with negative profitability, high leverage, and bearish technical indicators. While there are positive long-term strategies in place, such as the 'Beauty Reimagined' initiative and strong cash flow management, the immediate risks and market pressures, especially in Asia, weigh heavily on the stock. The valuation metrics add further caution due to negative earnings.

Positive Factors

Operational Efficiency

Estee Lauder aims to achieve consistent and sustainable growth in the U.S. and Western Europe, improve margins via manufacturing efficiencies, and shrink the cost structure.

Strategic Initiatives

Management has started taking the right steps to drive a longer-term recovery with their 'Beauty Reimagined' strategy to invest more behind the brands.

Negative Factors

Market Challenges

Increased uncertainty and lack of visibility will continue to pressure EL's results and valuation.

Sales and Profitability

Sales declines in key markets may hinder the company’s Profit Recovery and Growth Plan (PRGP) in restoring profitability.

The Estée Lauder Companies Business Overview & Revenue Model

Company Description

The 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 Money

The 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.

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.

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.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
15.61B	15.91B	17.74B	16.21B	14.29B
	Gross Profit
11.18B	11.35B	13.43B	12.38B	10.74B
	EBIT
970.00M	1.51B	3.17B	3.90B	2.71B
	EBITDA
1.98B	2.35B	3.79B	3.66B	2.71B
	Net Income Common Stockholders
390.00M	1.01B	2.39B	2.87B	684.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.40B	4.03B	3.96B	4.96B	5.02B
	Total Assets
21.68B	23.41B	20.91B	21.97B	17.78B
	Total Debt
9.83B	10.17B	7.64B	8.10B	8.79B
	Net Debt
6.43B	6.14B	3.69B	3.14B	3.77B
	Total Liabilities
16.36B	17.00B	14.48B	15.02B	13.82B
	Stockholders Equity
5.31B	5.58B	5.59B	6.09B	3.96B
Cash Flow		Free Cash Flow
1.44B	-1.56B	2.00B	2.99B	1.66B
	Operating Cash Flow
2.36B	1.73B	3.04B	3.63B	2.28B
	Investing Cash Flow
-960.00M	-3.22B	-945.00M	-1.86B	-1.70B
	Financing Cash Flow
-2.04B	1.52B	-3.04B	-1.89B	1.46B

The Estée Lauder Companies Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 59.96
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EL, the sentiment is Neutral. The current price of 59.96 is above the 20-day moving average (MA) of 56.45, below the 50-day MA of 64.18, and below the 200-day MA of 77.95, indicating a neutral trend. The MACD of -1.39 indicates Negative momentum. The RSI at 51.05 is Neutral, neither overbought nor oversold. The STOCH value of 94.97 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EL.

The Estée Lauder Companies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
IPAR	78 Outperform	$3.47B	21.13	22.76%	2.81%	10.22%	7.55%
UL	76 Outperform	$157.77B	25.35	30.53%	2.94%	1.99%	-10.59%
ELF	67 Neutral	$3.50B	36.86	14.24%	―	46.27%	-26.45%
CL	63 Neutral	$77.04B	27.06	977.07%	2.13%	0.98%	12.12%
COTY	62 Neutral	$4.53B	40.12	0.33%	―	1.35%	-99.94%
Sector *	60 Neutral	$6.86B	11.74	3.14%	4.15%	2.37%	-21.95%
EL	50 Neutral	$19.87B	147.29	-14.17%	3.40%	0.07%	-249.21%

The Estée Lauder Companies Corporate Events

Ronald S. Lauder to Retire from Estée Lauder Board

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.