{"id":2644,"date":"2023-10-18T09:57:24","date_gmt":"2023-10-18T09:57:24","guid":{"rendered":"https:\/\/infundpros.com\/markets\/will-estee-lauder-stock-rebound-to-its-pre-inflation-shock-highs\/"},"modified":"2023-10-18T09:57:24","modified_gmt":"2023-10-18T09:57:24","slug":"will-estee-lauder-stock-rebound-to-its-pre-inflation-shock-highs","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2644","title":{"rendered":"Will Estee Lauder Stock Rebound To Its Pre-Inflation Shock Highs?"},"content":{"rendered":"
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Estee Lauder stock<\/strong> (NYSE: EL) currently trades at $140 per share, 52% below the level seen in March 2021, and it appears undervalued. EL stock was trading at around $255 in early June 2022, just before the Fed started increasing rates, and is now 45% below that level, compared to 16% gains for the S&P 500 during this period. This underperformance of EL stock can be attributed to slowing sales growth, partly due to a slower recovery in Asia travel. Its profitability has also been adversely impacted in the recent past due to increased input costs and higher marketing spending, among other factors.<\/p>\n

Looking at a slightly longer term, EL stock has suffered a sharp decline of 45% from levels of $265 in early January 2021 to around $140 now, vs. an increase of about 15% for the S&P 500 over this roughly 3-year period. However, the decrease in EL stock has been far from consistent. Returns for the stock were 39% in 2021, -33% in 2022, and -44% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 13% in 2023 – indicating an underperformance for the ticker in 2022 and 2023.<\/p>\n

In fact, consistently beating the S&P 500<\/strong> – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Consumer Staples sector, including WMT, PG, and COST, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that?<\/strong> As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could EL face a similar situation as it did in 2022 and 2023 and lose value over the next 12 months – or will it see a recovery?<\/p>\n

Returning to the pre-inflation shock level of over $372 means that EL stock will have to gain more than 150% from here, and we don\u2019t think this will materialize anytime soon. That said, EL stock looks undervalued at its current price of $140. We estimate Estee Lauder\u2019s valuation<\/strong> to be around $236 per share, over 65% above its current market price.<\/p>\n

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Our detailed analysis of Estee Lauder\u2019s upside post-inflation shock<\/strong> captures trends in the company\u2019s stock during the turbulent market conditions seen over 2022. It compares these trends to the stock\u2019s performance during the 2008 recession.<\/p>\n

2022 Inflation Shock<\/strong><\/p>\n

Timeline of Inflation Shock So Far:<\/p>\n