Estee Lauder Stock: Up 1.85x Since 2018 Due To Rising Investor Expectations

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EL: Estee Lauder logo
EL
Estee Lauder

Estee Lauder (NYSE: EL) stock price rose 1.85x from $130 in 2018 end to around $240 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed a 32% rise in revenues and a 2.2% drop in the outstanding share count. Due to this, the company’s stock price has rallied and managed to outperform the S&P 500, which returned a little over 60% over the same period.

In our interactive dashboard, Why Estee Lauder Stock Moved: EL Stock Has Gained 85% Since 2018, we break down the factors behind this move.

(A) EL’s Total Revenue has risen 32% from $13.7 billion in FY 2018 to $18.1 billion currently

  • EL’s total revenue initially rose to $14.9 billion in FY ’19 before dropping to $14.3 billion in FY ’20 due to the pandemic (EL’s fiscal year ends in June).
  • However, demand has since surged and sales rose to $16.2 billion in FY ’21, and currently stand as high as $18.1 billion on an LTM basis.
  • Estee Lauder is an American multinational manufacturer and marketer of skincare, makeup, fragrance and hair care products, with a presence in markets across the globe.
  • Skin care sales are the highest contributor to net revenues, bringing in 58% of Estee Lauder’s sales as of FY ’21, standing at $9.48 billion.
  • For additional details about EL’s revenues and comparison to peers, see Estee Lauder (EL) Revenue Comparison
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  6. Forecast Of The Day: Estee Lauder’s Makeup Revenue

(B) Revenue per share (RPS) increased 35% from $37.17 in FY 2018 to $50.31 currently

  • EL’s revenue rose from $13.7 billion in FY 2018 to $18.1 billion currently, while the outstanding share count dropped from 368 million in FY 2018 to around 360 million currently.
  • Due to this, RPS has jumped 35% from $37.17 in FY ’18 to $50.31 currently.

(C) Price-To-Sales (P/S) multiple for EL rose strongly from 3.4x in 2018 to 8.3x by 2021 end but has pulled back to 4.8x currently, still 1.4x higher than its 2018 level

  • EL’s P/S multiple rose strongly to around 8.3x by late 2021, on the back of rising investor expectations surrounding increased demand for its cosmetics, leading to a rise in the company’s sales.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 4.8x.
  • For additional details about the company stock returns and comparison to peers, see Estee Lauder (EL) Stock Return Comparison.

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Returns May 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 EL Return -5% -32% 228%
 S&P 500 Return 0% -13% 85%
 Trefis Multi-Strategy Portfolio 0% -17% 225%

[1] Month-to-date and year-to-date as of 5/27/2022
[2] Cumulative total returns since the end of 2016

 

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