New York-based The Estée Lauder Companies Inc. (EL) is one of the world’s leading manufacturers, marketers, and sellers of skincare, makeup, fragrance, and hair care products, and is a steward of outstanding luxury and prestige brands globally. With a market cap of $28.5 billion, Estée Lauder’s products are sold in approximately 150 countries and territories.
Companies worth $10 billion or more are generally described as "large-cap stocks," Estée Lauder fits this bill perfectly. Given the company’s extensive brand portfolio and longstanding name in the cosmetic industry, its valuation above this mark is not surprising. The company sells its products under well-known brands like Estée Lauder, BALMAIN, Clinique, Jo Malone London, TOM FORD, and more.
Despite its strengths, Estée Lauder stock prices have plummeted 50.3% from its 52-week high of $159.75 achieved on Feb. 5. EL stock has dipped 9.4% over the past three months lagging behind the Dow Jones Industrials Average’s ($DOWI) 10.7% gains during the same time frame.
Over the longer term, Estée Lauder’s performance looks even grimmer. EL stock prices have plunged 45.8% on a YTD basis and 40.5% over the past 52 weeks, lagging behind DOWI’s 18.5% surge in 2024 and 23.8% returns over the past year.
To confirm the bearish trend, Estée Lauder has mostly traded below its 200-day moving average over the past year and below its 50-day moving average since mid-April with slight fluctuations.
EL stock prices closed down 20.9% in the trading session after the release of its disappointing Q1 results on Oct. 31. The company’s already low-profit margins took a sharp hit due to talcum litigation settlement agreement charges of $159 million. Moreover, the $97 million in restructuring and other charges also contributed to the company reporting a $156 million net loss to shareholders, down from a $31 million net income reported in the year-ago quarter. Meanwhile, its net sales dropped 4.5% year-over-year to approximately $3.4 billion, driven by a decline in revenues across all product categories and regions.
The company has faced several challenges, including weak consumer sentiment in China, inventory pressures from the decelerating retail market and a drop in demand for its brands. Observing these trends, the company expects its Q2 organic sales to decline 6% to 8%, compared to the year-ago quarter, making investors jittery.
Estée Lauder has lagged behind its competitor Coty Inc.’s (COTY) 34.1% decline over the past 52 weeks.
The stock has a consensus “Hold” rating among the 28 analysts covering it. EL’s mean price target of $80.48 represents a modest 1.5% premium to current price levels.
