Here’s How Estee Lauder Stock Has Managed To Outperform The S&P Since 2018

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EL: Estee Lauder logo
EL
Estee Lauder

Estee Lauder (NYSE: EL) stock price rose almost 1.7x from $130 at 2018 end to around $217 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed a 26% rise in revenues and a 2.4% 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 under 60% over the same period.

In our interactive dashboard, Why Estee Lauder Stock Moved: EL Stock Has Gained 67% Since 2018, we break down the factors behind this move.

(A) EL’s Total Revenue has grown 26% from $13.7 billion in FY 2018 to $17.7 billion in FY 2022 and currently stands slightly lower at $17.3 billion on an LTM basis

  • EL’s total revenue first rose from $13.7 billion in FY ’18 to $14.9 billion in FY ’19, before dropping to $14.3 billion in FY ’20 due to the pandemic.
  • However, revenues have since bounced back strongly and rose to $17.7 billion, as of the company’s most recent FY ’22 earnings, and currently stand slightly lower on an LTM basis. (EY’s fiscal year ends in June).
  • 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 largest contributor to the company’s net sales, bringing in 56% of Estee Lauder’s revenues as of FY ’22, standing at $9.89 billion.
  • For additional details about EL’s revenues and comparison to peers, see Estee Lauder (EL) Revenue Comparison
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(B) Revenue per share (RPS) increased 29% from $37.40 in 2018 to $48.40 currently

  • EL revenue rose from $13.7 billion in 2018 to $17.3 billion currently, while the outstanding share count decreased from 365.8 million in FY 2018 to 356.9 million currently.
  • Due to this, RPS has risen from $37.40 in FY ’18 to $48.40 currently.

(C) Price-To-Sales (P/S) multiple for EL rose strongly from 3.5x in 2018 to 8.3x by 2021 end but has pulled back to 4.5x currently, still 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 4.5x.
  • For additional details about the company stock returns and comparison to peers, see Estee Lauder (EL) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 EL Return 8% -41% 184%
 S&P 500 Return 2% -17% 77%
 Trefis Multi-Strategy Portfolio 2% -20% 215%

[1] Month-to-date and year-to-date as of 11/28/2022
[2] Cumulative total returns since the end of 2016

 

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