{"id":9110,"date":"2023-11-03T13:04:34","date_gmt":"2023-11-03T13:04:34","guid":{"rendered":"https:\/\/infundpros.com\/markets\/whats-next-for-estee-lauder-stock-after-a-19-fall-earlier-this-week\/"},"modified":"2023-11-03T13:04:35","modified_gmt":"2023-11-03T13:04:35","slug":"whats-next-for-estee-lauder-stock-after-a-19-fall-earlier-this-week","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=9110","title":{"rendered":"What\u2019s Next For Estee Lauder Stock After A 19% Fall Earlier This Week?"},"content":{"rendered":"
\n

Estee Lauder<\/strong> (NYSE: EL) reported its Q1\u201924 results earlier this week (the fiscal year ends in June), with revenues meeting and earnings beating the street estimates. However, the stock plunged 19% following the earnings release due to downbeat guidance. The company reported revenue of $3.5 billion and an adjusted loss of $0.11 per share, compared to the consensus estimates of $3.5 billion in sales and $0.22 loss per share. In this note, we discuss Estee Lauder\u2019s stock performance, key takeaways from its recent results, and valuation.<\/p>\n

EL stock has suffered a sharp decline of 60% from levels of $265 in early January 2021 to around $105 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 -58% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 11% in 2023 – indicating that EL underperformed the S&P<\/strong> 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.<\/p>\n

In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year<\/strong> 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.<\/p>\n

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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 underperform the S&P<\/strong> over the next 12 months – or will it see a recovery? From a valuation perspective, EL stock looks attractive. We estimate Estee Lauder\u2019s Valuation<\/strong> to be $159 per share, reflecting a significant 52% upside from its current levels of $105. At its current level, EL stock is trading at just 2.4x its forward revenues compared to its last three-year average of 6.4x. This recent decline in EL stock can be attributed to a significant cut in its fiscal 2024 guidance, with revenue now expected to be in a range between down 2% and up 1% from fiscal 2023. Earnings are expected to be in the range of $2.17 and $2.42, reflecting a meaningful decline from the $3.45 figure in fiscal 2023 and also much lower than the consensus estimate of $3.62.<\/p>\n

Estee Luder\u2019s revenue of $3.5 billion in Q1 was down 10% y-o-y. The company reported a 5% rise in Fragrance and a 1% rise in Makeup sales, but this was more than offset by a 22% decline in Skin Care and a 6% fall in Hair Care sales. This can be attributed to a weakening consumer spending environment and slower-than-anticipated demand pick-up in Asia. Gross margin plunged 440 bps, and operating margins dropped 1400 bps compared to the prior-year quarter due to lower sales and higher costs. The company\u2019s adjusted EPS stood at $0.11, vs. $1.37 in Q1 2023, reflecting a sharp 92% decline.<\/p>\n

Given the significant decline of 58% YTD, EL stock looks attractive at 2.4x forward sales, and investors will likely be better off picking it for solid long-term gains, in our view. That said, weak demand in Asia, higher costs, and the impact of a potential recession on Estee Lauder\u2019s business are key risk factors to realizing these gains.<\/p>\n

While EL stock looks attractive, it is helpful to see how Estee Lauder\u2019s Peers<\/strong> fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons<\/strong>.<\/strong><\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Estee Lauder (NYSE: EL) reported its Q1\u201924 results earlier this week (the fiscal year ends in June), with revenues meeting and earnings…<\/p>\n","protected":false},"author":1,"featured_media":2645,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-9110","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"\nWhat\u2019s Next For Estee Lauder Stock After A 19% Fall Earlier This Week? | inFundPros<\/title>\n<meta name=\"description\" content=\"Estee Lauder (NYSE: EL) reported its Q1\u201924 results earlier this week (the fiscal year ends in June), with revenues meeting and earnings beating the street\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=9110\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What\u2019s Next For Estee Lauder Stock After A 19% Fall Earlier This Week? 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