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The Estée Lauder Companies (EL)
NYSE:EL
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The Estée Lauder Companies
(NYSE:EL)
Rating:56Neutral
Price Target:
$67.00
▲( 5.25% Upside)
Positive Factors
Market Share Gains
Management highlights share gains in key markets, including the US, Mainland China, and Japan, as they execute their 'Beauty Reimagined' strategy.
Profit Recovery Plan
EL's Profit Recovery and Growth Plan (PRGP) helped reduce expenses and improve gross margins, leading to adj. EPS of $0.65, handily beating guidance of $0.20-$0.30.
Strategic Vision
EL's Beauty Reimagined strategic vision is set to drive long-term growth with a focus on streamlining operations, expanding consumer reach, accelerating innovation, and increasing investments in digital capabilities and high-growth channels.
Negative Factors
Earnings and Valuation
Operating margins at ~7.6% in FY25E remain depressed vs. ~15% 5-yr history, and valuation remains fairly high at ~27 FY2 P/E.
Travel Retail Challenges
EL's travel retail business continues to be a major pain point and saw sales down -28% organically.
Uncertain Sales Outlook
Sales outlook remains uncertain, particularly in Asia travel retail, with the company's performance expected to remain weak due to the slower-than-anticipated recovery of the prestige beauty market and challenges in key regions like mainland China, Korea, and Hong Kong SAR.
The Estée Lauder Companies (EL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$23.77B
Dividend Yield3.06%
Average Volume (3M)4.16M
Price to Earnings (P/E)147.3
Beta (1Y)1.22
Revenue Growth-3.70%
EPS Growth-235.59%
CountryUS
Employees44,020
SectorConsumer Cyclical
Sector Strength74
IndustryHousehold & Personal Products
Share Statistics
EPS (TTM)0.65
Shares Outstanding234,209,950
10 Day Avg. Volume3,567,168
30 Day Avg. Volume4,162,337
Financial Highlights & Ratios
PEG Ratio1.02
Price to Book (P/B)5.06
Price to Sales (P/S)0.00
P/FCF Ratio23.14
Enterprise Value/Market Cap1.21
Enterprise Value/Revenue0.47
Enterprise Value/Gross Profit2.63
Enterprise Value/Ebitda6.39
Forecast
1Y Price Target
$66.00Price Target Upside3.68% Upside
Rating ConsensusHold
Number of Analyst Covering19
The Estée Lauder Companies Business Overview & Revenue Model
Company DescriptionThe Estée Lauder Companies Inc. is a global leader in the beauty industry, specializing in the manufacture and marketing of high-quality skincare, makeup, fragrance, and hair care products. Founded in 1946, the company operates in the consumer goods sector and holds a diverse portfolio of over 25 brands, including Estée Lauder, Clinique, MAC, Bobbi Brown, La Mer, and Aveda. The company is headquartered in New York City and serves customers in over 150 countries through a range of distribution channels, including department stores, specialty retailers, upscale perfumeries, and direct-to-consumer platforms.
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 Key Performance Indicators (KPIs)
Any
Revenue by Segment
Highlights revenue from different business segments, offering insight into which product lines or services are driving growth and where there might be vulnerabilities or opportunities for expansion.
Highlights revenue from different business segments, offering insight into which product lines or services are driving growth and where there might be vulnerabilities or opportunities for expansion.
Data provided by:
Main Street Data
Main Street DataThe Estée Lauder Companies Financial Statement Overview
Summary
The Estée Lauder Companies are navigating a challenging financial period with declining revenues and net losses impacting profitability. The balance sheet reflects high leverage, posing potential risks. However, the company shows resilience in maintaining positive cash flows, suggesting an ability to manage operations amidst difficulties. Strategic actions may be necessary to address revenue declines and leverage to improve financial health.Income Statement
The Estée Lauder Companies faced significant challenges with a negative net income and EBIT for TTM (Trailing-Twelve-Months), leading to negative profit margins. Revenue decreased by approximately 10.9% from the previous year, pointing to declining sales performance. Despite these setbacks, the gross profit margin remains relatively healthy at approximately 78.6%, indicating efficient production costs management.45
Neutral
Balance Sheet
The company's balance sheet shows a high debt-to-equity ratio of approximately 2.07, indicating significant leverage and potential financial risk. Stockholders' equity constitutes around 21.8% of total assets, reflecting moderate equity coverage. Return on equity is negative due to the net loss, highlighting profitability challenges.55
Neutral
Cash Flow
The cash flow analysis reveals a positive free cash flow of $948 million for TTM, although it decreased by 34.2% compared to the previous year. The operating cash flow to net income ratio is negative due to net losses, but the company maintains a positive operating cash flow, underscoring some operational strength.60
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 14.79B | 15.61B | 15.91B | 17.74B | 16.21B | 14.29B | Gross Profit |
| 10.92B | 11.18B | 11.35B | 13.43B | 12.38B | 10.74B | EBIT |
| -628.00M | 970.00M | 1.51B | 3.17B | 3.90B | 2.71B | EBITDA |
| 136.00M | 1.98B | 2.35B | 3.79B | 3.66B | 2.71B | Net Income Common Stockholders |
| -871.00M | 390.00M | 1.01B | 2.39B | 2.87B | 684.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.63B | 3.40B | 4.03B | 3.96B | 4.96B | 5.02B | Total Assets |
| 19.89B | 21.68B | 23.41B | 20.91B | 21.97B | 17.78B | Total Debt |
| 9.38B | 9.83B | 10.17B | 7.64B | 8.10B | 8.79B | Net Debt |
| 6.75B | 6.43B | 6.14B | 3.69B | 3.14B | 3.77B | Total Liabilities |
| 15.54B | 16.36B | 17.00B | 14.48B | 15.02B | 13.82B | Stockholders Equity |
| 4.34B | 5.31B | 5.58B | 5.59B | 6.09B | 3.96B |
| Cash Flow | Free Cash Flow | ||||
| 948.00M | 1.44B | -1.56B | 2.00B | 2.99B | 1.66B | Operating Cash Flow |
| 1.56B | 2.36B | 1.73B | 3.04B | 3.63B | 2.28B | Investing Cash Flow |
| -1.38B | -960.00M | -3.22B | -945.00M | -1.86B | -1.70B | Financing Cash Flow |
| -1.25B | -2.04B | 1.52B | -3.04B | -1.89B | 1.46B |
The Estée Lauder Companies Technical Analysis
Neutral
63.66
Price Trends
61.34
Positive
67.55
Negative
75.29
Negative
Market Momentum
1.40
Negative
55.08
Neutral
65.74
Neutral
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 63.66 is above the 20-day moving average (MA) of 61.58, above the 50-day MA of 61.34, and below the 200-day MA of 75.29, indicating a neutral trend. The MACD of 1.40 indicates Negative momentum. The RSI at 55.08 is Neutral, neither overbought nor oversold. The STOCH value of 65.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $4.18B | 25.27 | 22.16% | 2.35% | 10.32% | 18.55% | |
76 Outperform | $158.27B | 25.39 | 30.53% | 2.93% | 1.99% | -10.59% | |
67 Neutral | $4.49B | 48.47 | 14.24% | ― | 46.27% | -26.45% | |
63 Neutral | $74.55B | 26.05 | 977.07% | 2.19% | 0.98% | 12.12% | |
62 Neutral | $6.97B | 11.36 | 2.77% | 3.91% | 2.66% | -22.00% | |
60 Neutral | $4.39B | 40.12 | -10.58% | ― | -1.68% | -302.11% | |
56 Neutral | $23.77B | 147.29 | -17.27% | 3.06% | -3.70% | -235.59% |
* Consumer Cyclical Sector Average
Performance Comparison
EL
The Estée Lauder Companies
63.66
-64.22
-50.22%
CL
Colgate-Palmolive
91.67
-1.09
-1.18%
IPAR
Inter Parfums
131.00
15.66
13.58%
UL
Unilever
63.46
10.97
20.90%
COTY
Coty
4.86
-5.50
-53.09%
ELF
e.l.f. Beauty
79.06
-76.57
-49.20%
The Estée Lauder Companies Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q3-2025)
| % Change Since: 6.17%|
Next Earnings Date:Aug 20, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive developments, such as gross margin expansion and market share gains, alongside significant challenges, including a decline in organic sales and ongoing pressure in travel retail. The company's strategic initiatives show promise, but external factors like tariffs pose risks.Q3-2025 Updates
Positive Updates
Gross Margin Expansion
Gross margin expanded over 300 basis points for the fourth consecutive quarter, driven by operational efficiencies and strategic pricing actions.
Market Share Gains
The company gained market share in the U.S., China, and Japan, with Clinique, The Ordinary, and Bumble and bumble leading gains in the U.S. and La Mer, Estée Lauder, and TOM FORD driving gains in China and Japan.
Successful Strategic Initiatives
New brand launches and platform expansions on Amazon, Shopee, and TikTok contributed to a mid-single-digit growth in online organic sales.
Significant Cost Reductions
Through the Profit Recovery and Growth Plan (PRGP), the company reduced over 2,600 net positions and achieved a 30% reduction in executive team expenses.
Negative Updates
Decline in Organic Sales
Organic sales declined by 9%, with travel retail sales dropping 28% organically.
Earnings Per Share and Operating Margin Decline
Diluted earnings per share decreased by 33%, and the operating margin contracted by 270 basis points to 11.4%.
Challenges in Travel Retail
Travel retail continues to shrink as a percentage of the business, highlighting ongoing pressure in this segment.
Pressure from New Tariffs
The newly enacted tariffs are expected to have a material impact on fiscal 2026 unless a resolution is achieved.
Company Guidance
During The Estée Lauder Companies' Fiscal 2025 Third Quarter Conference Call, several metrics and strategic initiatives were highlighted. The company reported a 9% decline in organic sales for the quarter, with a 3% decrease in business excluding travel retail, and a 28% decline in travel retail. Despite challenges, diluted earnings per share decreased by 33%, which exceeded expectations, demonstrating effective expense management. Gross margin expanded by over 300 basis points, marking the fourth consecutive quarter of improvement, driven by the Profit Recovery and Growth Plan (PRGP). Operating margin stood at 11.4%, contracting by 270 basis points due to increased consumer-facing spending. The company gained market share in key markets such as the U.S., China, and Japan, driven by brands like Clinique, The Ordinary, and La Mer. Additionally, Estée Lauder introduced innovations across prestige price tiers and expanded online sales, with mid-single-digit growth driven by pure play and third-party platforms. Looking ahead, the company aims to return to sales growth in fiscal 2026, focusing on mitigating the impact of tariffs and optimizing supply chain strategies.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.