The Estée Lauder Companies (EL) AI Stock Analysis

• Market Cap: $20.93B
• Dividend Yield: 3.47%
• Average Volume (3M): 3.52M
• Price to Earnings (P/E): 147.3
• Beta (1Y): 1.23
• Revenue Growth: 0.07%
• EPS Growth: -249.21%
• Country: US
• Employees: 44,020
• Sector: Consumer Cyclical
• Sector Strength: 46
• Industry: Household & Personal Products
• EPS (TTM): -1.95
• Shares Outstanding: 234,173,420
• 10 Day Avg. Volume: 4,013,165
• 30 Day Avg. Volume: 3,522,963
• 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: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $76.60
• Price Target Upside: 44.72% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 21

The Estée Lauder Companies are currently facing significant financial and operational challenges, reflected in declining revenues and profitability issues. While the company is undertaking strategic initiatives to restore growth and profitability, the financial health remains a concern due to high leverage and net losses. Technical indicators suggest bearish market sentiment, with the stock trading below major moving averages. Valuation metrics highlight profitability issues, though the dividend yield provides some support. The earnings call indicates a balanced sentiment, with optimism for strategic changes but concerns over market pressures, particularly in Asia.

Positive Factors

Growth Strategy

Estee Lauder is focusing on reducing complexity by consolidating operations and believes it can capitalize on growth opportunities quickly, as demonstrated by its Amazon rollout.

Market Share

Estee Lauder's innovation pipeline, investments in digital capabilities, improved distribution channel mix, and enhanced supply chain are set to help regain market share and drive long-term growth.

Strategic Innovation

Management is prioritizing transformative innovation that deliver fast-market on trend innovation and committed to tripling the percentage of innovation that is launched in less than a year.

Negative Factors

Financial Pressure

Estee Lauder's topline is under pressure, operating margins are in the single-digit range, and there is a need for increased reinvestments in the business.

Market Uncertainty

Investors are largely in a wait-and-see mode due to the lack of visibility into end-market recovery, particularly in China and travel retail, and potential execution risks around the new strategic vision.

Sales Challenges

Sales outlook remains uncertain, particularly in Mainland China and Asia travel retail.

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 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
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
15.16B	15.61B	15.91B	17.74B	16.21B	14.29B
	Gross Profit
11.08B	11.18B	11.35B	13.43B	12.38B	10.74B
	EBIT
102.00M	970.00M	1.51B	3.17B	3.90B	2.71B
	EBITDA
589.00M	1.98B	2.35B	3.79B	3.66B	2.71B
	Net Income Common Stockholders
-700.00M	390.00M	1.01B	2.39B	2.87B	684.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.38B	3.40B	4.03B	3.96B	4.96B	5.02B
	Total Assets
5.79B	21.68B	23.41B	20.91B	21.97B	17.78B
	Total Debt
1.42B	9.83B	10.17B	7.64B	8.10B	8.79B
	Net Debt
36.40M	6.43B	6.14B	3.69B	3.14B	3.77B
	Total Liabilities
3.69B	16.36B	17.00B	14.48B	15.02B	13.82B
	Stockholders Equity
2.08B	5.31B	5.58B	5.59B	6.09B	3.96B
Cash Flow		Free Cash Flow
1.15B	1.44B	-1.56B	2.00B	2.99B	1.66B
	Operating Cash Flow
1.81B	2.36B	1.73B	3.04B	3.63B	2.28B
	Investing Cash Flow
-1.44B	-960.00M	-3.22B	-945.00M	-1.86B	-1.70B
	Financing Cash Flow
-1.69B	-2.04B	1.52B	-3.04B	-1.89B	1.46B

The Estée Lauder Companies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 52.93
• 50DMA: Negative
• 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 Negative. The current price of 52.93 is below the 20-day moving average (MA) of 66.22, below the 50-day MA of 70.40, and below the 200-day MA of 82.25, indicating a bearish trend. The MACD of -1.35 indicates Negative momentum. The RSI at 47.95 is Neutral, neither overbought nor oversold. The STOCH value of 42.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EL.

The Estée Lauder Companies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PG	76 Outperform	$404.23B	27.47	31.05%	2.33%	0.49%	5.02%
UL	76 Outperform	$154.49B	25.09	30.53%	2.97%	1.99%	-10.59%
ELF	62 Neutral	$3.10B	32.67	14.24%	―	46.27%	-26.45%
Sector *	59 Neutral	$12.18B	11.09	-1.08%	3.77%	1.26%	-19.82%
NUS	57 Neutral	$339.61M	―	-19.90%	3.51%	-12.04%	-1796.38%
COTY	57 Neutral	$4.54B	40.12	0.33%	―	1.35%	-99.94%
EL	50 Neutral	$20.93B	147.29	-14.17%	3.47%	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.