Shares of Estée Lauder (EL), a manufacturer of beauty products, are little changed in today’s trading as investors await its Q4 earnings results on August 19 before the market opens. Analysts are expecting earnings per share to come in at $0.27 on revenue of $3.817 billion. This equates to 286% and 6% year-over-year increases, respectively, according to TipRanks’ data.
This is ideal because earnings per share should grow faster than revenue as this demonstrates a high degree of operating and financial leverage in the business. It’s also worth noting that EL has beaten earnings estimates seven times during the past eight quarters.
However, there are still concerns investors should be aware of. According to TipRanks’ Bulls Say, Bears Say tool, competition has been intensifying globally. In addition, the market conditions aren’t exactly helping either, as China and the travel retail industry are seeing a slow recovery.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 10.39% move in either direction.
Is EL a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on EL stock based on seven Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 40% decline in its share price over the past year, the average EL price target of $133.08 per share implies 40% upside potential.
