Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.
Growth Stock Analysis as of 18 November 2023
Top Growth Stock
NYSE: The Estée Lauder Companies Inc. (EL)
- * Estée Lauder manufactures and sells skincare, makeup, fragrance, and hair care products globally, offering a range that includes moisturizers, serums, cleansers, makeup items, and more.
- * The company distributes its products through various channels, including department stores, specialty retailers, online platforms, freestanding stores, and duty-free locations.
- * The Estée Lauder Companies Inc. was founded in 1946 and is headquartered in New York, USA.
- * Despite being in a growing industry, the company is currently navigating challenges attributed to its reliance on Asian markets.
- * The company heavily relies on skincare, which accounts for 51% of sales and 83% of operating profit. Diversification across beauty industry segments is seen as a more stable strategy to mitigate risks.
- * Estée Lauder’s product line includes various well-known brands, such as Estée Lauder, Clinique, MAC, Bobbi Brown, La Mer, Aveda, Jo Malone, and many others.
Shareholding Patterns of The Estée Lauder Companies Inc.:
| Holder | Shares | Date Reported | % Out | Value |
|---|---|---|---|---|
| Vanguard Group Inc | 18,486,137 | Jun 29, 2023 | 7.96% | 2,102,428,423 |
| Blackrock Inc. | 15,215,547 | Jun 29, 2023 | 6.55% | 1,730,464,211 |
| State Street Corporation | 10,019,387 | Jun 29, 2023 | 4.31% | 1,139,504,917 |
| Edgewood Management Llc | 7,491,271 | Jun 29, 2023 | 3.22% | 851,982,275 |
| Fundsmith LLP | 5,418,525 | Jun 29, 2023 | 2.33% | 616,248,866 |
| Royal Bank of Canada | 4,867,672 | Jun 29, 2023 | 2.10% | 553,600,352 |
| Capital International Investors | 4,584,843 | Jun 29, 2023 | 1.97% | 521,434,209 |
| Geode Capital Management, LLC | 4,219,658 | Jun 29, 2023 | 1.82% | 479,901,718 |
| Morgan Stanley | 4,229,261 | Jun 29, 2023 | 1.82% | 480,993,867 |
| Price (T.Rowe) Associates Inc | 4,025,244 | Jun 29, 2023 | 1.73% | 457,791,013 |
List of Brands under The Estée Lauder Companies Inc.
What we think are pros of business:
The extensive array of well-regarded brands in their portfolio creates a substantial economic advantage for the company, historically resulting in significant returns on invested capital.- Brand is recognized for its innovation in skincare and cosmetics, and it has a global presence, serving consumers in over 150 countries.
- The Brand’s strong brand presence helped them dominate the beauty market.
- The company’s plans to close underperforming stores will minimize costs and boost e-commerce sales.
- This has a good mix of brands and product lines that cater to both the upper, middle and lower ends of the beauty market and its pricing power is fundamentally what allows most companies to earn excess returns on their invested capital
What we think the risks are:
- The company’s revenues dropped off due to lower management fees and the stock dropped off because stocks were selling off.
- Estee Lauder’s overreliance on the skincare segment raises concerns about its risk profile.Â
- Intense competition within the beauty industry may affect market share and profitability.
- Negative publicity, product recalls, or controversies can harm brand reputation and customer trust.
- Events like pandemics, geopolitical tensions, or natural disasters can impact global supply chains and consumer behavior.
Fundamentals:
- Market Cap: 43.88 Billion
- Revenue: 15.5 Billion
- 52 Week Range: 102.22 – 283.62
- Dividend: 2.64 (2.15%)
- EPS: 1.54
- PE: 80.20
Technical for a long-term perspective:
– Taking support at the lower rectangular support line which is the support zone from the last 7 years.
There is a Yellow trendline resistance line on the upside which will be its target because stock price may try to hit the trendline again as last two times.
– There is a reversal price action pattern which shows the strength of the stock for upside momentum.
– It may try to hit its EMA levels as a resistance zone around 170 levels.
- – The current level is a trend reversal level. So, there is a high probability of bullish momentum from this level.
– RSI is trading in the oversold zone and heading towards upper levels, current level of RSI is 23.
– Don’t book profit early, you can ride the profit with trailing Stoploss for bigger targets.
Entry = 113
Stop Loss = 98
Target = 156 / 190 / 260
Our Final Thought:
Estée Lauder is a top player in beauty and cosmetics with famous brands. They’ve managed money well and consistently grown their sales, making them a strong player in the market. Even though they faced challenges in recent fiscal years due to global economic issues, their stock dropped by 60% this year, which could be a good chance to invest. While the stock seems cheap, our analysis suggests it’s undervalued by about 16% at best. The financial signs are a bit mixed, and we’re not sure when sales will pick up. There’s potential for profit, but it’s smart to be careful and consider the risks in these uncertain market times.
As on the Technical view, it seems very bullish for the upcoming few months and it has a great potential for upside momentum and it must be follow higher high patterns in the upcoming weeks.
Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.
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