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