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Estee Lauder (EL) wins but trails: what you need to know

techsm5

Estee Lauder (EL) closed the last day of trading at $263.81, moving +1.01% from the previous trading session. This change lagged the S&P 500’s 2.28% gain on the day. Elsewhere, the Dow gained 2.13%, while the tech-heavy Nasdaq gained 5.02%.

Prior to today’s session, shares of the beauty company had gained 7.65% in the past month. That outpaced the Consumer Staples sector’s loss of 2.09% and the S&P 500’s loss of 4.61% during that time.

Investors are hoping for Estee Lauder’s strength as its next earnings release approaches. The company is expected to post EPS of $1.30, down 56.81% from the prior year quarter. Meanwhile, our latest consensus estimate calls for revenue of $4.55 billion, down 17.78% from the prior year quarter.

For the full year, our Zacks consensus estimates call for earnings of $5.35 per share and revenue of $16.57 billion, which would represent swings of -26.1% and -6, 58%, respectively, compared to the previous year.

Any recent changes in analyst estimates for Estee Lauder should also be noted by investors. These revisions help show the ever-changing nature of short-term trading trends. With this in mind, we can view positive estimate revisions as a sign of optimism about the company’s business outlook.

Our research shows that these estimate changes are directly correlated to short-term stock prices. Investors can take advantage of this by using the Zacks ranking. This model accounts for these estimation changes and provides a simple and actionable scoring system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven track record of outperformance, with #1 stocks returning an average of +25% per year since 1988. In the past 30 days, our consensus EPS projection is down 0.11%. Estee Lauder currently holds a Zacks rank of #3 (Hold).

Valuation is also important, so investors should note that Estee Lauder has a Forward P/E ratio of 48.84 at this time. For comparison, its industry has an average Forward P/E of 31.76, which means Estee Lauder is trading at a premium to the group.

Meanwhile, EL’s PEG ratio is currently 5.11. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. The cosmetics industry currently had an average PEG ratio of 1.86 at yesterday’s close.

The cosmetics industry is part of the consumer staples sector. This group has a Zacks industry ranking of 33, which places it in the top 14% of over 250 industries.

The Zacks Industry Ranking assesses the strength of our industry groups by measuring the average Zacks Ranking of individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

Be sure to track all of these stock movement metrics, and more, at Zacks.com.

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It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

techsm5

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