The Estee Lauder Companies Inc. Class A
EL
$69.12
-2.25%
The Estee Lauder Companies Inc. is a global leader in the prestige beauty market, operating across skincare, makeup, fragrance, and hair care. It is defined by its portfolio of iconic brands and a vast international distribution network, which are its core competitive advantages.
EL
The Estee Lauder Companies Inc. Class A
$69.12
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Investment Opinion: Should I buy EL Today?
Based on a synthesis of the technical, fundamental, and sentiment data, the objective assessment is a Hold. The stock is deeply oversold and shows signs of fundamental stabilization (positive cash flow, improved recent net income), which argues against a Sell rating. However, the extreme negative momentum, high leverage, and lack of consistent profitability preclude a Buy recommendation until a clearer recovery trajectory is established. Investors should await confirmation of sustained earnings improvement and debt reduction.
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EL 12-Month Price Forecast
The analysis is neutral with medium confidence. The severe technical breakdown and fundamental weaknesses are balanced by the stock's deeply oversold condition, valuable assets, and recent positive cash flow. The high probability base case reflects a challenging path to a meaningful re-rating.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on The Estee Lauder Companies Inc. Class A's 12-month outlook, with a consensus price target around $89.86 and implied upside of +30.0% versus the current price.
Average Target
$89.86
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$55 - $90
Analyst target range
Wall Street analyst consensus shows a mix of ratings, with recent actions including 'Buy' from Citigroup, 'Overweight' from JP Morgan, and 'Outperform' from RBC Capital, balanced by several 'Hold', 'Equal Weight', and 'Market Perform' ratings from firms like Wells Fargo, Barclays, and Telsey Advisory Group. The analyst data provided includes forward estimates for EPS and revenue but does not contain a consensus target price, so a specific price target is not available.
Bulls vs Bears: EL Investment Factors
EL presents a classic turnaround story with significant opposing forces. Its powerful brand equity and improving cash flow are offset by severe recent stock price destruction, weak profitability, and high debt. The stock is at a critical inflection point, with its future dependent on sustaining operational improvements.
Bullish
- Strong Brand Portfolio: Owns iconic prestige beauty brands like Estée Lauder, Clinique, and La Mer.
- Solid Cash Flow Generation: Generated $1.14B TTM free cash flow, providing financial flexibility.
- Recent Profitability Improvement: Q2 FY26 net income of $162M vs. a loss of $590M a year ago.
- Analyst Support: Several major firms maintain Buy/Overweight ratings, signaling turnaround potential.
Bearish
- Severe Technical Downtrend: Stock down 37.9% in one month, trading near 52-week lows.
- Weak Profitability Metrics: Negative TTM net margin (-7.93%) and deeply negative ROE (-29.31%).
- High Financial Leverage: Debt-to-equity ratio of 2.44 indicates significant balance sheet risk.
- Volatile Earnings: Recent quarters show large swings between profit and loss.
EL Technical Analysis
The stock's overall trend over the provided 180-day period shows significant volatility, with a peak around $119.49 in late January 2026 and a sharp decline to $67.98 by March 30, 2026. The 6-month price change is -21.14%, indicating a strong negative trend over this timeframe. Short-term performance has been extremely weak, with the stock down 37.90% over the past month and 35.77% over the past three months. This underperformance is stark relative to the broader market, as indicated by the -30.03 and -28.45 relative strength figures for the 1-month and 3-month periods, respectively. The current price of $67.98 is near the bottom of its 52-week range of $48.37 to $121.64, representing a significant drawdown from its recent highs. The stock is currently trading well below its levels from late 2025, reflecting severe recent selling pressure.
Beta
1.11
1.11x market volatility
Max Drawdown
-43.8%
Largest decline past year
52-Week Range
$48-$122
Price range past year
Annual Return
+0.5%
Cumulative gain past year
| Period | EL Return | S&P 500 |
|---|---|---|
| 1m | -30.0% | -3.6% |
| 3m | -35.3% | -4.0% |
| 6m | -21.5% | -2.0% |
| 1y | +0.5% | +16.2% |
| ytd | -35.3% | -3.8% |
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EL Fundamental Analysis
Revenue for the latest quarter (Q2 FY2026) was $4.24 billion, representing a 5.84% year-over-year growth. However, profitability has been inconsistent; the latest quarter showed a net income of $162 million, a significant improvement from a net loss of $590 million in the year-ago quarter, but the trailing twelve-month net margin remains negative at -7.93%. Financial health is a concern, with a high debt-to-equity ratio of 2.44. Positively, the company generated strong operating cash flow of $1.13 billion in the latest quarter and has a trailing twelve-month free cash flow of $1.14 billion, providing some liquidity. Operational efficiency metrics are mixed. Return on Equity (ROE) is deeply negative at -29.31%, while Return on Assets (ROA) is positive at 4.42%. The current ratio of 1.30 indicates adequate short-term liquidity, though it has declined from higher levels in prior quarters.
Quarterly Revenue
$4.2B
2025-12
Revenue YoY Growth
+0.05%
YoY Comparison
Gross Margin
+0.76%
Latest Quarter
Free Cash Flow
$1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is EL Overvalued?
Given the company's negative trailing net income, the Price-to-Sales (PS) ratio is a more appropriate valuation metric than the P/E ratio. The current PS ratio is 2.04. The forward P/E ratio of 22.41 is also provided, but it is based on estimated future profitability. Peer comparison data is not available in the provided inputs. The high EV/EBITDA ratio of 184.53 reflects the company's currently depressed earnings, while the Price/Book ratio of 7.53 indicates the market is valuing the company's equity at a significant premium to its book value.
PE
-25.7x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range -533x~438x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
184.5x
Enterprise Value Multiple
Investment Risk Disclosure
The primary risk is financial, stemming from the company's high debt-to-equity ratio of 2.44, which could strain operations if interest rates remain elevated or if cash flow weakens. Profitability risk is also acute, as evidenced by the negative trailing net margin and ROE, indicating the business model is under pressure despite recent quarterly improvement. Market and sentiment risks are severe; the stock has collapsed over 35% in three months, underperforming the S&P 500 by nearly 30 percentage points, suggesting a profound loss of investor confidence that may be difficult to reverse. Finally, execution risk remains high, as the company must prove that its Q2 FY26 profit is sustainable and not an anomaly amidst a volatile earnings history.
FAQ
The key risks are financial, operational, and sentiment-based. Financially, the high debt-to-equity ratio of 2.44 is a major concern. Operationally, profitability is fragile, with a negative trailing net margin of -7.93%. From a market perspective, the stock has shown extreme weakness, down 37.9% in one month, indicating a severe loss of investor confidence that could persist regardless of fundamentals.
The 12-month outlook is for high volatility with a base case target range of $70 to $95, representing a potential 3% to 40% upside from $67.98. This assumes gradual stabilization. A bullish case to $121 (78% upside) requires a flawless turnaround, while a bearish case could see a retest of the $48 low (29% downside). The wide range reflects the company's current binary investment profile between recovery and further decline.
Based on traditional metrics, EL appears mixed. It is arguably undervalued on a Price-to-Sales basis (PS ratio 2.04), which is low relative to its historical range. However, it looks expensive on an EV/EBITDA basis (184.53) due to currently depressed earnings, and the forward P/E of 22.41 is not cheap for a company with inconsistent profitability. The valuation reflects a distressed scenario with a premium for brand value.
EL is a speculative buy, not a core holding. At $67.98, it trades near its 52-week low of $48.37, suggesting much bad news is priced in. The improving quarterly net income ($162M in Q2 FY26 vs. a loss) and strong $1.14B free cash flow are positives. However, given its high debt (D/E 2.44) and severe negative momentum, it is only suitable for investors with a high risk tolerance and a long-term view on a turnaround.
EL is unsuitable for short-term investment due to its extreme volatility and negative momentum. It is only appropriate for long-term investors (3-5 year horizon) who can withstand further downside and believe in the enduring value of its brand portfolio to engineer a sustained turnaround. The company's challenges—debt reduction and profit stabilization—are multi-year endeavors.