Trade-Ideas: Estee Lauder Cos (EL) Is Today's Strong On High Relative Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Estee Lauder Cos ( EL) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Estee Lauder Cos as such a stock due to the following factors:

  • EL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $116.5 million.
  • EL has traded 982,856 shares today.
  • EL is trading at 17.72 times the normal volume for the stock at this time of day.
  • EL is trading at a new high 7.00% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on EL:

The Estee Lauder Companies Inc. manufactures, markets, and sells skin care, makeup, fragrance, and hair care products worldwide. The stock currently has a dividend yield of 1.2%. EL has a PE ratio of 28.4. Currently there are 13 analysts that rate Estee Lauder Cos a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Estee Lauder Cos has been 1.7 million shares per day over the past 30 days. Estee Lauder Cos has a market cap of $19.0 billion and is part of the consumer goods sector and consumer non-durables industry. The stock has a beta of 1.30 and a short float of 2.5% with 4.69 days to cover. Shares are up 8.6% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Estee Lauder Cos as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and increase in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Personal Products industry and the overall market, LAUDER (ESTEE) COS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for LAUDER (ESTEE) COS INC is currently very high, coming in at 84.44%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.31% is above that of the industry average.
  • Net operating cash flow has increased to $866.00 million or 15.08% when compared to the same quarter last year. Despite an increase in cash flow, LAUDER (ESTEE) COS INC's cash flow growth rate is still lower than the industry average growth rate of 30.86%.
  • 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 0.7% when compared to the same quarter one year prior, going from $432.50 million to $435.70 million.

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