EL - Embedded Expectations Analysis - 2021 07 15
The Estée Lauder Companies Inc. (EL:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 42.2x Uniform P/E, implying bullish expectations for the firm. However, management may have concerns about their advertising, innovation, and online investments, Mainland China, travel, and pre-tail sales growth, and cost management.Specifically, management may lack confidence in their ability to sustain improving trends in makeup through future-rich franchises, as well as secure competitive investments in advertising, innovation, and online capabilities, particularly with Virtual Try-On. Furthermore, they may have concerns about the pace of recovery of core products, the potential of La Mer's virtual consultations for local consumers, and their economic and travel recovery product mix plan. Moreover, management may lack confidence in their ability to continue exceeding sales guidance, sustain operating margin growth, and maintain overall sales growth, particularly in the pre-tail segment. Finally, they may lack confidence in their ability to manage costs.
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.