EL - Embedded Expectations Analysis - 2018 12 04
The Estée Lauder Companies Inc. (EL:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 26.1x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about their ability to meet EPS guidance, the strength of their innovation programs, and weakness across international marketsSpecifically, management may lack confidence in their ability to execute effectively to meet their raised EPS guidance, and to support their innovations with advertising and marketing. Additionally, they may lack confidence in their ability to drive sustainable growth through their innovation program, and may be exaggerating their customer loyalty. In addition, they may be concerned about their ability to sustain strong momentum for M-A-C in the short-term, specifically in the Middle East, China and TR segment. Also, they may be exaggerating the strength of their e-commerce sales across their brands, and of the underlying retail trends in the Middle East and Latin America, particularly Brazil and Mexico. Finally, they may lack confidence in their ability to maintain current operating margins, particularly in their makeup lines due to outsized spending driven by new launches
Estee Lauder Companies is a manufacturer and marketer of skin care, makeup, fragrance and hair care products. The company's products are sold under a number of brand names including: Estee Lauder, Clinique, Origins, MzAzC, Bobbi Brown, La Mer, Jo Malone London, Aveda and Too Faced. The company is also the global licensee for fragrances, cosmetics and/or related products sold under various designer brand names. The company's products include skin care, makeup and related items such as compacts, brushes and other makeup tools, fragrance sold in various forms, hair care, and other ancillary products and services.
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