We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Estee Lauder (EL) Q1 Earnings: Travel Retail to Stay Strong?
Read MoreHide Full Article
The Estee Lauder Companies Inc. (EL - Free Report) is slated to release first-quarter fiscal 2019 results on Oct 31. The cosmetics biggie boasts a splendid surprise history and has been delivering earnings and sales beats for six straight quarters now. Let’s see what’s in store for the company this time around.
The Estee Lauder Companies Inc. Price and EPS Surprise
Growth in travel retail business is a major driving factor for Estee Lauder. This is quite evident from the company’s past record, as exceptional growth in this category largely fueled fourth-quarter fiscal 2018 sales. Travel retail sales growth in the quarter was mainly backed by double-digit growth in EMEA. In fact, the company has been undertaking various efforts to enhance conversions through strategic initiatives. To this end, it has been working toward endeavors like better customer insights, enhanced merchandising and improved digital marketing. Management expects continued growth in the travel retail channel, especially in China.
Further, Estee Lauder is poised to continue gaining from its buyouts of Too Faced and BECCA. Notably, these businesses have strengthened Estee Lauder’s fastest growing prestige portfolio, with sales from Too Faced rising 22% in the fourth quarter. The investment in DECIEM, a fast-growing multi-brand company, is also likely to aid beauty sales. Additionally, Estee Lauder has a strong online business and the company expects it to be a major growth engine for the upcoming years. During fiscal 2018, online sales remained strong, representing more than 20% of sales growth in the United States and China. The company’s online business is growing well on its brand.com sites, retailer.com and other platforms like T-mall. Thanks to technological advancement and the growing popularity of social media, mobile sales have been growing considerably. This enables Estee Lauder to widen its global online presence by adding new sites and expanding retailer distributions.
Hurdles to be Offset?
Estee Lauder has been focused on enhancing its advertising and marketing efforts, which, however, entail high costs. Incidentally, the company’s operating expenses as a percentage of sales expanded 110 basis points (bps) in the fourth quarter of fiscal 2018, owing to increased advertising investments to support digital activities. Consequently, operating margin contracted 90 bps during the quarter. Persistence of such trends is a distress.
Nonetheless, we expect Estee Lauder’s robust brand portfolio, solid emerging market presence and strategic growth endeavors to help it offset these headwinds as well as counter competition from cheaper alternatives. Further, management’s projections for the first quarter and fiscal 2019 makes us optimistic about the company’s upcoming results. Markedly, the company expects continued growth opportunities in the global prestige beauty industry, which is now anticipated to grow 5-6% in fiscal 2019.
Q1 Expectations
For the first quarter, net sales are expected to rise 5-6%. The Zacks Consensus Estimate stands at $3,477 million, reflecting 6.2% growth from the year-ago figure. Further, the company projects adjusted EPS of $1.18-$1.22. At cc, the bottom line is expected to rise 7-10%. The consensus mark stands at $1.22, which has gone up by a notch in the past seven days and also compares favorably with $1.21 per share reported in the year-ago period.
What the Zacks Model Unveils
Our proven model shows that Estee Lauderis likely to beat bottom-line estimates this quarter. For this to happen, the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Estee Lauder has a Zacks Rank #3 and an Earnings ESP of +1.30%, which makes us reasonably confident of an earnings beat.
Other Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat:
Ralph Lauren Corporation (RL - Free Report) , a Zacks #2 Ranked company, has an Earnings ESP of +0.23%.
PVH Corp. (PVH - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Estee Lauder (EL) Q1 Earnings: Travel Retail to Stay Strong?
The Estee Lauder Companies Inc. (EL - Free Report) is slated to release first-quarter fiscal 2019 results on Oct 31. The cosmetics biggie boasts a splendid surprise history and has been delivering earnings and sales beats for six straight quarters now. Let’s see what’s in store for the company this time around.
The Estee Lauder Companies Inc. Price and EPS Surprise
The Estee Lauder Companies Inc. Price and EPS Surprise | The Estee Lauder Companies Inc. Quote
Factors Likely to Drive Estee Lauder
Growth in travel retail business is a major driving factor for Estee Lauder. This is quite evident from the company’s past record, as exceptional growth in this category largely fueled fourth-quarter fiscal 2018 sales. Travel retail sales growth in the quarter was mainly backed by double-digit growth in EMEA. In fact, the company has been undertaking various efforts to enhance conversions through strategic initiatives. To this end, it has been working toward endeavors like better customer insights, enhanced merchandising and improved digital marketing. Management expects continued growth in the travel retail channel, especially in China.
Further, Estee Lauder is poised to continue gaining from its buyouts of Too Faced and BECCA. Notably, these businesses have strengthened Estee Lauder’s fastest growing prestige portfolio, with sales from Too Faced rising 22% in the fourth quarter. The investment in DECIEM, a fast-growing multi-brand company, is also likely to aid beauty sales. Additionally, Estee Lauder has a strong online business and the company expects it to be a major growth engine for the upcoming years. During fiscal 2018, online sales remained strong, representing more than 20% of sales growth in the United States and China. The company’s online business is growing well on its brand.com sites, retailer.com and other platforms like T-mall. Thanks to technological advancement and the growing popularity of social media, mobile sales have been growing considerably. This enables Estee Lauder to widen its global online presence by adding new sites and expanding retailer distributions.
Hurdles to be Offset?
Estee Lauder has been focused on enhancing its advertising and marketing efforts, which, however, entail high costs. Incidentally, the company’s operating expenses as a percentage of sales expanded 110 basis points (bps) in the fourth quarter of fiscal 2018, owing to increased advertising investments to support digital activities. Consequently, operating margin contracted 90 bps during the quarter. Persistence of such trends is a distress.
Nonetheless, we expect Estee Lauder’s robust brand portfolio, solid emerging market presence and strategic growth endeavors to help it offset these headwinds as well as counter competition from cheaper alternatives. Further, management’s projections for the first quarter and fiscal 2019 makes us optimistic about the company’s upcoming results. Markedly, the company expects continued growth opportunities in the global prestige beauty industry, which is now anticipated to grow 5-6% in fiscal 2019.
Q1 Expectations
For the first quarter, net sales are expected to rise 5-6%. The Zacks Consensus Estimate stands at $3,477 million, reflecting 6.2% growth from the year-ago figure. Further, the company projects adjusted EPS of $1.18-$1.22. At cc, the bottom line is expected to rise 7-10%. The consensus mark stands at $1.22, which has gone up by a notch in the past seven days and also compares favorably with $1.21 per share reported in the year-ago period.
What the Zacks Model Unveils
Our proven model shows that Estee Lauderis likely to beat bottom-line estimates this quarter. For this to happen, the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Estee Lauder has a Zacks Rank #3 and an Earnings ESP of +1.30%, which makes us reasonably confident of an earnings beat.
Other Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat:
Lululemon Athletica Inc. (LULU - Free Report) , a Zacks #1 Ranked stock, has an Earnings ESP of +1.95%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ralph Lauren Corporation (RL - Free Report) , a Zacks #2 Ranked company, has an Earnings ESP of +0.23%.
PVH Corp. (PVH - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>