Now trading at a price of $139.27, Estee Lauder has moved -0.3% so far today.
Estee Lauder returned losses of -39.0% last year, with its stock price reaching a high of $283.62 and a low of $139.08. Over the same period, the stock underperformed the S&P 500 index by -55.0%. As of April 2023, the company's 50-day average price was $162.81. The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. Based in New York, NY, the large-cap Consumer Discretionary company has 44,020 full time employees. Estee Lauder has offered a 1.8% dividend yield over the last 12 months.
Low Leverage Levels but a Declining EPS Growth Trend:
| 2017-08-25 | 2018-08-24 | 2019-08-23 | 2020-08-28 | 2021-08-27 | 2022-08-24 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $11,824 | $13,683 | $14,863 | $14,294 | $16,215 | $17,737 |
| Gross Margins | 79.0% | 79.0% | 77.0% | 75.0% | 76.0% | 76.0% |
| Operating Margins | 14% | 15% | 18% | 15% | 19% | 20% |
| Net Margins | 11.0% | 8.0% | 12.0% | 5.0% | 18.0% | 13.0% |
| Net Income (MM) | $1,249 | $1,108 | $1,785 | $684 | $2,870 | $2,390 |
| Net Interest Expense (MM) | -$103 | -$128 | -$133 | -$113 | -$122 | -$137 |
| Depreciation & Amort. (MM) | -$464 | -$531 | -$557 | -$611 | -$651 | -$727 |
| Earnings Per Share | $3.35 | $2.95 | $4.82 | $1.86 | $7.79 | $6.55 |
| EPS Growth | n/a | -11.94% | 63.39% | -61.41% | 318.82% | -15.92% |
| Diluted Shares (MM) | 373 | 376 | 370 | 367 | 368 | 365 |
| Free Cash Flow (MM) | $2,292 | $3,202 | $3,259 | $2,903 | $4,236 | $4,080 |
| Capital Expenditures (MM) | -$492 | -$629 | -$742 | -$623 | -$605 | -$1,040 |
| Net Current Assets (MM) | -$2,202 | -$1,689 | -$1,533 | -$4,927 | -$5,255 | -$5,180 |
| Long Term Debt (MM) | $3,383 | $3,361 | $2,896 | $4,914 | $5,537 | $5,144 |
| Net Debt / EBITDA | 0.85 | 0.32 | 0.13 | 0.41 | 0.17 | 0.34 |
Estee Lauder has low leverage, wider gross margins than its peer group, and average operating margins with a positive growth rate. However, the firm has declining EPS growth. Finally, we note that Estee Lauder has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and a decent current ratio.
The Market May Be Overvaluing Estee Lauder's Earnings and Assets:
Estee Lauder has a trailing twelve month P/E ratio of 58.4, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $5.56, the company has a forward P/E ratio of 29.3. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -3.0%. On this basis, the company's PEG ratio is -19.43, which indicates that its shares are overpriced. Furthermore, Estee Lauder is likely overvalued compared to the book value of its equity, since its P/B ratio of 8.92 is higher than the sector average of 3.12. The company's shares are currently trading 173.2% above their Graham number.
Analysts Give Estee Lauder an Average Rating of Buy:
The 28 analysts following Estee Lauder have set target prices ranging from $146.0 to $280.0 per share, for an average of $191.18 with a buy rating. As of April 2023, the company is trading -14.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Estee Lauder has a very low short interest because 1.4% of the company's shares are sold short. Institutions own 92.6% of the company's shares, and the insider ownership rate stands at 0.5%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 8% stake in the company is worth $2,574,564,378.
