“From December 1, 1995 to January 3, 2022 Estee Lauder stock returned roughly 2050% versus the S&P 500 return of roughly 423% or about 4x the return of “the market”. Beauty & vanity matters.”
COMPANY PROFILE
The Estée Lauder Companies Inc. is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company’s products aresold in approximately 150 countries and territories under brand names including: EstéeLauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, M•A•C,Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, AERIN, Tory Burch, RODIN olio lusso, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, By Kilian, BECCA and Too Faced.
Recent Earnings
“Prestige beauty continues to be one of the most desirable consumer sectors. As the best diversified pure play in the industry, we are uniquely positioned to capture global share. In fiscal 2020, we plan to continue to invest in the most compelling opportunities, including those in emerging markets beyond China. We expect another year of strong net sales growth, margin improvement and a double-digit increase in earnings per share.”
Style Factor Benefits
From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Estee Lauder scores well as of 1/3/22:
81% high and strong free cash flow growth
80% high dividend growth
71% high shareholder yield
78% strong price momentum on multiple time periods
91% wide moat characteristics using multiple inputs
91% 1 year strong EPS growth
1/3/22 Update
Can you think of anything more predictable than global vanity? The global beauty market is about $110B per year and Estee Lauder has plenty of growth in front of it, particularly in China and Asia. The company has embraced digital and it’s paying off huge. The latest quarter beat expectations and raised guidance and cited China growth as their biggest opportunity and where the strongest momentum is. I love investing in brands that serve multiple demographic groups, multiple geographies with multiple skews and that have high frequencies of repeat business from loyal customers. The stock is not cheap currently but as long as the growth continues, the multiple can expand and the stock can keep rising while growing into its valuation. There has been some softening in the cosmetics industry and the travel link will continue to offer lumpy trends so any dips on this one are a screaming buy in my humble opinion. Global vanity is a significant secular theme that warrants exposure in a portfolio, particularly given the enormous global millennial and Gen-Z population.