The Estée Lauder Companies (EL) AI Stock Analysis

• Market Cap: $23.51B
• Dividend Yield: 3.09%
• Average Volume (3M): 4.85M
• Price to Earnings (P/E): 147.3
• Beta (1Y): 1.20
• Revenue Growth: -3.70%
• EPS Growth: -235.59%
• Country: US
• Employees: 44,020
• Sector: Consumer Cyclical
• Sector Strength: 73
• Industry: Household & Personal Products
• EPS (TTM): 0.65
• Shares Outstanding: 234,209,950
• 10 Day Avg. Volume: 3,951,148
• 30 Day Avg. Volume: 4,851,542
• PEG Ratio: 1.02
• Price to Book (P/B): 5.06
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.14
• Enterprise Value/Market Cap: 1.22
• Enterprise Value/Revenue: 0.47
• Enterprise Value/Gross Profit: 2.63
• Enterprise Value/Ebitda: 6.39
• 1Y Price Target: $66.00
• Price Target Upside: 2.95% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 19

The Estée Lauder Companies face significant financial challenges with declining revenues and profitability issues, reflected in a low financial performance score. While technical analysis shows some positive momentum, valuation concerns and mixed earnings call results suggest caution. Strategic initiatives and market share gains are promising, but high leverage and external risks, such as tariffs, weigh on the overall outlook.

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 Business Overview & Revenue Model

Company Description

The 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 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 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 64.11
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 64.11 is above the 20-day moving average (MA) of 59.12, above the 50-day MA of 62.03, and below the 200-day MA of 76.09, indicating a neutral trend. The MACD of 0.85 indicates Negative momentum. The RSI at 59.48 is Neutral, neither overbought nor oversold. The STOCH value of 75.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	80 Outperform	$3.95B	23.88	22.16%	2.45%	10.32%	18.55%
UL	76 Outperform	$151.63B	24.38	30.53%	3.05%	1.99%	-10.59%
ELF	67 Neutral	$4.18B	46.51	14.24%	―	46.27%	-26.45%
COTY	63 Neutral	$4.37B	40.12	-10.58%	―	-1.68%	-302.11%
CL	63 Neutral	$71.22B	24.88	977.07%	2.30%	0.98%	12.12%
Sector *	61 Neutral	$7.00B	11.55	3.07%	3.89%	2.60%	-21.53%
EL	56 Neutral	$23.51B	147.29	-17.27%	3.09%	-3.70%	-235.59%

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.