How Will Estee Lauder (EL) Stock React To This Ratings Reiteration?

NEW YORK (TheStreet) -- Estee Lauder Companies Inc. (EL) was reiterated with a ‘buy’ rating at Goldman Sachs (GS) on Monday.

The firm said it kept this rating on the company, which manufactures and markets a line of skin care, makeup, fragrance, and hair care products, as it believes Estee Lauder’s 2014 fourth quarter report will be positive.

Estee Lauder will release its earnings results on Friday, August 15 before the opening bell.

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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, growth in earnings per share, increase in net income, good cash flow from operations and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EL's revenue growth has slightly outpaced the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 11.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • LAUDER (ESTEE) COS INC has improved earnings per share by 20.0% 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 $2.58 versus $2.16 in the prior year. This year, the market expects an improvement in earnings ($3.05 versus $2.58).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Personal Products industry average. The net income increased by 19.2% when compared to the same quarter one year prior, going from $178.80 million to $213.20 million.
  • Net operating cash flow has increased to $387.00 million or 38.65% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 13.60%.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: EL Ratings Report
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