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Since The Estée Lauder Companies Inc (NYSE:EL) released its earnings in March 2018, analysts seem cautiously optimistic, with profits predicted to increase by 41.83% next year compared with the past 5-year average growth rate of 5.46%. Currently with trailing-twelve-month earnings of US$1.15b, we can expect this to reach US$1.63b by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Estée Lauder Companies in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
See our latest analysis for Estée Lauder Companies
What can we expect from Estée Lauder Companies in the longer term?
The longer term expectations from the 22 analysts of EL is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of EL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, EL’s earnings should reach US$2.26b, from current levels of US$1.25b, resulting in an annual growth rate of 19.97%. EPS reaches $5.78 in the final year of forecast compared to the current $3.4 EPS today. Growth in the bottom line seems to suggest cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 10.56%, this movement will result in a margin of 15.62% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Estée Lauder Companies, there are three relevant aspects you should look at:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is Estée Lauder Companies worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Estée Lauder Companies is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Estée Lauder Companies? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.