Skip to Content

The Estee Lauder Companies Inc Class A EL

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Wide-Moat Estee Lauder Is Competently Navigating Pandemic Disruption, but Valuation Is Not Pretty

Analyst Note

| Rebecca Scheuneman, CFA |

Despite many COVID-19-related store closures across continental Europe, Latin America, and Asia throughout Estee Lauder’s September-ended first fiscal quarter, the firm reported 18% organic constant currency sales growth, or 16.5% excluding second-quarter shipments that were pulled forward, handily beating our 12% estimate. While we don’t expect double-digit growth to persist, as the pace was boosted by an easy comparison, demand for Estee’s products remain robust, with organic first-quarter sales 7% ahead of the same period two years prior. All product categories were ahead of prepandemic levels except makeup, which remains 19% depressed, given ongoing mask mandates. We expect Estee’s cosmetics business will fully recover in time as COVID-19 restrictions continue to ease and the firm rolls out a robust pipeline of innovations, backed with solid marketing investments (we forecast 23% of sales in fiscal 2022), continuing to support the firm’s strong brand intangible assets, which serves as the foundation of Estee’s wide moat.

Read Full Analysis

Company Profile

Business Description

Estee Lauder is the world leader in the global prestige beauty market, participating across skincare (58% of fiscal 2021 sales), makeup (26%), fragrance (12%), and haircare (4%) categories, with popular brands such as Estee Lauder, Clinique, MAC, La Mer, Jo Malone, Aveda, Bobbi Brown, Too Faced, Origins, Dr. Jart+, and The Ordinary. The firm operates in 150 countries, with 23% of fiscal 2021 revenue stemming from the Americas, 43% from Europe, the Middle East and Africa, and 34% from Asia-Pacific. The company sells its products through department stores, travel retail, multibrand specialty beauty stores, brand-dedicated freestanding stores, e-commerce, salons/spas, and perfumeries.

Contact
767 Fifth Avenue
New York, NY, 10153
T +1 212 572-4200
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Sep 30, 2021
Fiscal Year End Jun 30, 2022
Stock Type Classic Growth
Employees 62,000

Related