It hasn't been a great afternoon session for Estee Lauder investors, who have watched their shares sink by -1.7% to a price of $100.46. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Estee Lauder's Valuation Is in Line With Its Sector Averages:
The Estée Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, Estee Lauder has a trailing 12 month P/E ratio of -31.9 and a P/B ratio of 9.35.
Estee Lauder has moved 15.1% over the last year compared to 16.6% for the S&P 500 — a difference of -1.5%. Estee Lauder has a 52 week high of $104.53 and a 52 week low of $48.37.
Wider Gross Margins Than the Industry Average of 59.94%:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $14,863 | $14,294 | $16,215 | $17,737 | $15,910 | $15,608 |
| Gross Margins | 77% | 75% | 76% | 76% | 71% | 72% |
| Net Margins | 12% | 5% | 18% | 14% | 6% | 3% |
| Net Income (M) | $1,794 | $684 | $2,875 | $2,408 | $1,010 | $409 |
| Net Interest Expense (M) | $133 | $161 | $173 | $167 | $255 | $378 |
| Depreciation & Amort. (M) | $557 | $611 | $651 | $727 | $744 | $825 |
| Diluted Shares (M) | 367 | 368 | 366 | 360 | 360 | 360 |
| Earnings Per Share | $4.89 | $1.86 | $7.86 | $6.68 | $2.81 | $1.14 |
| EPS Growth | n/a | -61.96% | 322.58% | -15.01% | -57.93% | -59.43% |
| Avg. Price | $170.18 | $199.35 | $305.28 | $272.63 | $146.25 | $102.16 |
| P/E Ratio | 34.24 | 104.92 | 38.35 | 40.39 | 51.86 | 89.61 |
| Free Cash Flow (M) | $1,773 | $1,657 | $2,994 | $2,000 | $728 | $1,441 |
| CAPEX (M) | $744 | $623 | $637 | $1,040 | $1,003 | $919 |
| EV / EBITDA | 21.94 | 59.59 | 33.95 | 25.39 | 24.86 | 23.31 |
| Total Debt (M) | $5,178 | $6,135 | $5,291 | $5,379 | $7,637 | $7,780 |
| Net Debt / EBITDA | 0.55 | 0.48 | 0.21 | 0.42 | 1.64 | 2.89 |
| Current Ratio | 1.69 | 1.9 | 1.73 | 1.66 | 1.36 | 1.37 |
Estee Lauder has positive cash flows, just enough current assets to cover current liabilities, as shown by its current ratio of 1.37, and significant leverage levels. We also note that the company benefits from slight revenue growth and increasing reinvestment in the business and wider gross margins than its peer group. However, the firm has declining EPS growth.
