Aanchal Sugandh
4 min read
Before Wall Street even had its morning coffee on Monday, June 23, Estée Lauder (EL) stole the spotlight. There was no press release or major announcement, just a shift in perception. Deutsche Bank analyst Steve Powers upgraded the beauty titan from “Hold” to “Buy.”
Shares jumped nearly 5% on the news, leaving the S&P 500 Index ($SPX) trailing behind. What triggered this sudden optimism was Powers’ conviction that Estée Lauder’s international expansion plans, particularly those extending beyond China, are finally bearing fruit.
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Powers acknowledged not just the strength of the company’s diversified product portfolio, but also the fact that its heavy lifting on the investment front, particularly in supply-chain management, appears complete. For a company that has spent the past year in the penalty box, this upgrade marks a much-needed reversal of sentiment.
Headquartered in New York, Estée Lauder is no stranger to luxury. Its product lines, ranging from skincare and makeup to fragrance and hair care, are household names in premium beauty. The company’s brand roster reads like a who’s who of luxury, from Clinique and Bobbi Brown to La Mer and Tom Ford Beauty.
With a market capitalization of $28.4 billion, the company operates squarely in the prestige segment. Yet prestige alone has not spared it from market turbulence. Over the past 52 weeks, the stock has lost 33% of its value.
However, in a surprising twist of momentum, EL stock has rebounded 21% in the past month, reflecting a growing conviction that the worst may be behind.
Despite recent challenges, EL stock trades at 51 times forward adjusted earnings and 1.7 times sales, far above sector norms, implying that investors are pricing in a premium rebound. These elevated multiples reflect confidence in its brand moat, margin recovery, and global strategy.
Meanwhile, the firm's commitment to shareholders remains consistent. The company pays an annual dividend of $1.71, yielding 2.17%. Most recently, a quarterly payout of $0.35 was issued on June 16 to shareholders on record as of May 30, further signaling confidence from the inside out.
