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Estée Lauder Q1 Earnings: Is NYSE:EL Expensive at 122.6x Price/EPS?

in EARNINGS/INVESTING IDEAS by

The Estée Lauder Companies Inc. (NYSE:EL) is scheduled to report Q1 earnings results on November 2, 2020.

The company is expected to report earnings of $0.89/share on revenue of $3.463 billion. The consensus earnings per share (EPS) of $0.89/share is based on a poll of 20 analysts and represents a decline in eps of −46.4% over the same quarter last year, when the company reported earnings of $1.67/share.

The revenue forecast of $3.463 billion based on a poll of 15 analysts implies a year-over-year (YoY) decline in revenue of −11.1%. Last year the company reported $3.895 billion in revenue for the quarter.

Expected to report EPS contraction of −46.4% for Q1, 2021
Metric Expected Prior Year YoY Change
Revenue $3,462.93 $3,895.00 −11.1%
EPS $0.89 $1.67 −46.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from The Estée Lauder Companies Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2020 -$0.17 -$0.53 -203.3% Missed
Q3, 2020 $0.76 $0.85 11.4% Beat
Q2, 2020 $1.90 $2.11 11.0% Beat
Q1, 2020 $1.60 $1.67 4.7% Beat
Q4, 2019 $0.54 $0.64 19.3% Beat
Q3, 2019 $1.30 $1.55 19.4% Beat
Q2, 2019 $1.54 $1.74 12.7% Beat
Q1, 2019 $1.23 $1.41 15.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −2.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 20, 2020 $212.50 $207.01 −2.6% Decline
May 1, 2020 $176.40 $172.54 −2.2% Decline
February 6, 2020 $201.32 $208.96 3.8% Increase
October 31, 2019 $193.27 $186.58 −3.5% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.28, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.28 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Estée Lauder Companies Inc. is currently trading at $232.17/share, down −1.3% for the day. The company is trading at approximately 98.4% of its 52-week high of $235.84/share. The company’s stock price is up 12.2% since the last earnings report and up 2.9% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 63.68 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:EL Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 122.60 and a forward P/E multiple of 48.58.

The Estée Lauder Companies Inc.’s current share price also implies a price-to-book (P/B) multiple of 21.31. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q4
Period End Date June 30, 2020
Stock Price (Current) $232.17
P/E Ratio 122.6x
P/E Ratio (Fwd) 48.6x
PEG Ratio −2.0
Total Debt / Total Capital 9.4%
Levered Free Cash Flow $1.657 billion
EV / EBITDA 32.3x

Finbox

The Estée Lauder Companies Inc. is a large-cap stock with a market capitalization of $83.861 billion and a total enterprise value of $87.64 billion. The company operates in the Consumer Staples sector and the Personal Products industry.

The Estée Lauder Companies Inc. manufactures and markets skin care, makeup, fragrance, and hair care products. The company offers a range of skin care products, including moisturizers, serums, cleansers, toners, body care, exfoliators, acne care and oil correctors, facial masks, cleansing devices, and sun care products; and makeup products, such as lipsticks, lip glosses, mascaras, foundations, eyeshadows, nail polishes, and powders, as well as compacts, brushes, and other makeup tools. It also provides fragrance products in various forms comprising eau de parfum sprays and colognes, as well as lotions, powders, creams, candles, and soaps; and hair care products that include shampoos, conditioners, styling products, treatment, finishing sprays, and hair color products, as well as sells ancillary products and services. The company offers its products under Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, By Kilian, BECCA, Too Faced, RODIN olio lusso, FLIRT!, Kiton, and Tom Ford brands. It also holds license arrangements for Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors, Ermenegildo Zegna, Dr. Andrew Weil, TOM FORD BEAUTY, AERIN, and Tory Burch brands. The company sells its products through department stores, specialty-multi retailers, upscale perfumeries and pharmacies, and salons and spas; freestanding stores; its own and authorized retailer Websites; third-party online malls; stores in airports and on cruise ships; in-flight and duty-free shops; and self-select outlets. It has operations in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The Estée Lauder Companies Inc. has a joint development agreement with Atropos Therapeutics Inc. to discover senomodulators. The company was founded in 1946 and is headquartered in New York, New York.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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