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Estee Lauder stock analysis. Ticker: $EL
Estee Lauder used to be one of the best stocks in the market. From 2009 to 2022, shares went up over 2000%. However, the stock has now fallen more than 60% from its all-time high taking the company’s value to 49 billion dollars.
The reason for that performance is that Estee Lauder’s results have come under severe pressure. Trailing twelve month revenue has fallen 10% to 15.5 billion. Net income has fallen from over 3 billion in 2022 to only 548 million over the last 12 months. That has caused the PE ratio to explode past 80.
Estee Lauder’s poor results are being driven by a number of factors. First, the company has heavy exposure to department stores which have seen weak traffic since COVID. Second, an economic slowdown in China is affecting sales and there are concerns that Estee Lauder is losing share to more modern brands such as ELF cosmetics. Meanwhile, management admitted its supply chain is too long, which has caused forecasting issues for retailers.
Perhaps the biggest issue, however, is Estee Lauder’s duty-free and travel retail business which contributed to a 27% drop in sales in the most recent quarter. This weakness is being driven by a slower than expected recovery in Asia travel as well as new regulations on duty-free shopping, particularly in Korea.
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