Story updated at 9:50 a.m. to reflect market activity.
Shares of Estee Lauder gained 1% to $69.86 in morning trading.
Goldman Sachs analysts said Estee Lauder has a strong market position, but noted that the company is trading at trough levels.
Separately, TheStreet Ratings team rates LAUDER (ESTEE) COS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LAUDER (ESTEE) COS INC (EL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.9%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, EL has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for LAUDER (ESTEE) COS INC is currently very high, coming in at 83.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.32% is above that of the industry average.
- LAUDER (ESTEE) COS INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, LAUDER (ESTEE) COS INC increased its bottom line by earning $2.58 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.58).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: EL Ratings Report