EL - Embedded Expectations Analysis - 2019 06 14
The Estée Lauder Companies Inc. (EL:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 28.5x Uniform P/E, implying bullish expectations for the firm. However, management has concerns about fragrance and Asia Pacific sales growth, their new product launches, and their performance across sales channels.Specifically, management may lack confidence in their ability to sustain fragrance sales performance, increase mobile device sales in Asia Pacific, and perform in new markets. In addition, they may be exaggerating their ability to attract young customers with their Micro Essence Lotion line, the potential of Clinique's new spokesperson promotional strategy, and their leadership in Travel Retail and online beauty categories. Also, management may be concerned about the launch of Clinique Moisture Surge, their sales channel mix, and their focus on main product SKUs. Furthermore, they may be exaggerating their opportunities for innovation across segments, and may lack confidence in their ability to meet net sales growth expectations and sustain double digit growth in China.
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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