Yahoo Finance Bear of the Day: The Estee Lauder Companies (EL)
The Estee Lauder Companies EL is one of the world's leading manufacturers and marketers of skincare, makeup, fragrance, and hair care products. The company's products are sold through department stores, mass retailers, company-owned retail stores, hair salons, and travel-related establishments.
Analysts have taken a bearish stance on the company’s earnings outlook, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Share Performance & Quarterly Results
EL shares have struggled to find traction over the last month, down nearly 20% and underperforming relative to the general market. As we can see by the red arrow circled in the chart below, the market had a poor reaction to EL’s latest quarterly release.
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In the above-mentioned release, EL posted EPS of $0.47, 4% below expectations and reflecting a 75% year-over-year pullback. Still, top line results showed some positivity, with EL beating sales expectations by roughly 1%.
It’s worth noting that the recent EPS miss broke a long-standing trend of positive earnings surprises.
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Valuation
EL shares may not entice value-focused investors, reflected by its Style Score of “F” for Value. Presently, Estee Lauder shares trade at a 51.2X forward earnings multiple, well above the 36.2X five-year median.
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The company’s forward price-to-sales ratio presently works out to be 4.5X, nearly in line with the five-year median and below the Zacks sector average.
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Dividends
The company rewards its shareholders, with its annual dividend currently yielding a respectable 1.3%.
Undoubtedly worth highlighting, the company has shown a commitment to increasingly rewarding investors, carrying a 12% five-year annualized dividend growth rate.
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Bottom Line
A recent EPS miss on the minds of investors and negative earnings estimate revisions from analysts paint a challenging picture for the company’s shares in the near term.
The Estee Lauder Companies EL is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook over the last several months.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
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The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
