Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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Highlights from the ratings report include:
- LAUDER (ESTEE) COS INC has improved earnings per share by 8.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LAUDER (ESTEE) COS INC increased its bottom line by earning $2.16 versus $1.74 in the prior year. This year, the market expects an improvement in earnings ($2.57 versus $2.16).
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for LAUDER (ESTEE) COS INC is currently very high, coming in at 81.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.74% is above that of the industry average.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Personal Products industry average. The net income increased by 7.5% when compared to the same quarter one year prior, going from $278.60 million to $299.50 million.
The Estee Lauder Companies Inc. engages in the manufacture, marketing, and sale of skin care, makeup, fragrance, and hair care products worldwide. Estee Lauder Cos has a market cap of $14.99 billion and is part of the consumer goods sector and consumer non-durables industry. The company has a P/E ratio of 28.4, above the S&P 500 P/E ratio of 17.7. Shares are up 5.5% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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