What Our Analysts Know About Estee Lauder

Estee Lauder logged a -3.7% change during today's afternoon session, and is now trading at a price of $270.45 per share. The S&P 500 index moved 1.3% and the Nasdaq posted a 3.2% change.

Estee Lauder shares moved -7.4% over the last 52 weeks, with a high of $324.7 and a low of $186.47. During this time, the stock basically tracked the performance of the S&P 500. As of January 2022, the company's 50-day average price is $249.0.

The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The large-cap Consumer Defensive company has 44,730 full time employees and is based in New York, NY. Estee Lauder has returned a 0.9% dividend yield over the last 12 months.

The Company Has a Steady Stream of Positive Cash Flows:

2019-06-30 2020-06-30 2021-06-30 2022-06-30
Revenue (MM) $14,863 $14,294 $16,215 $17,737
Revenue Growth n/a -3.83% 13.44% 9.39%
Gross Margins 77.2% 75.2% 76.4% 75.7%
Gross Margins Growth n/a -2.59% 1.6% -0.92%
Operating Margins 17.6% 14.7% 18.6% 20.0%
Operating Margins Growth n/a -16.48% 26.53% 7.53%
Earnings Per Share $4.82 $1.86 $7.79 $6.55
EPS Growth n/a -61.41% 318.82% -15.92%
Free Cash Flow (MM) $1,773 $1,657 $2,994 $2,000
FCF Growth n/a -6.54% 80.69% -33.2%
Capital Expenditures (MM) -$744 -$623 -$637 -$1,040
Net Debt / EBITDA 0.13 0.45 0.22 0.42

Estee Lauder Is Fairly Priced at Current Levels:

Compared to the Consumer Defensive sector's average of 24.21, Estee Lauder has a trailing twelve month P/E ratio of 44.9 and, according to its EPS guidance of 7.25, an expected P/E ratio of 37.3. Estee Lauder's PEG ratio is 0.71 based on its 63.25% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Estee Lauder's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 3.44, which suggests that the company's shares are actually overvalued.

Estee Lauder's P/B ratio is 17.5 compared to its sector average of 4.09. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 533.0% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 5.25 * 15.452) = $42.72

Estee Lauder's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.

Estee Lauder Is the Subject of Mixed Market Indicators:

24 analysts are following Estee Lauder and have set target prices ranging from $209 to $315 per share. On average, they have given the company a rating of buy. At the current price of $270.45, EL is trading -1.23% away from its average analyst target price of $273.83 per share, implying an analyst consensus of some upside potential for the stock.

The company has a very low short interest since 1.4% of the company's shares are tied to short positions. Institutions own 91.6% of Estee Lauder's shares, while the insider ownership rate stands at 0.51%. The biggest shareholder is the Vanguard Group, Inc. with a 8% stake in the company worth approximately $4,898,557,796.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.