What Happened With Estee Lauder’s Earnings?

Estee Lauder released a strong earnings report last week, so we decided to take a look at how good an investment the beauty giant really is.

Feb. 8, 2022

Estee Lauder (NYSE: EL) is a Manhattan-based beauty product manufacturer that is known worldwide for its powerful brand and innovative products. The company owns and distributes a number of immensely popular brands within the beauty space, including ‘The Ordinary,’ ‘Jo Malone,’ and ‘Tom Ford.’

The firm released its Q2 earnings last week and surprised many on Wall Street with its strong results despite having to navigate both COVID and supply chain-related headwinds.

Estee Lauder’s Quarterly Results

Estee Lauder posted an impressive earnings beat in its second-quarter fiscal 2022 results. The company increased both its top and bottom line year-over-year (YoY) and recorded net sales growth in every single product category and region. 

Adjusted earnings per share (EPS) greatly outpaced analyst estimates, coming in at $3.01 against a predicted $2.63. Revenue also topped expectations, coming in at $5.54 billion versus a consensus estimate of $4.85 billion.

When we look at individual segments, the firm’s fragrance arm showed the greatest improvement, with revenue spiking by 29% YoY. Skincare and makeup were up 12% and 11% respectively, while haircare sales rose by an impressive 17%.

Similar positive results were on display for the company’s regional breakdown, with sales in Europe, the Middle East and Africa, and the Americas all rising by double digits. Growth, while still occurring, was markedly slower in the Asia-Pacific region. Revenue growth only amounted to 7% here in a development that seems to have spooked some analysts.

Should I buy Estee Lauder stock?

Despite its impressive earnings report, Estee Lauder stock slumped by 5% following its quarterly call. Analysts seemed concerned about slowing sales in Asia. The stock has since recovered much of this loss and has remained relatively stable. It must be noted that China has been undergoing strict pandemic restrictions that have undoubtedly affected sales. The easing of these restrictions should spark growth once again.

Estee Lauder offers an exciting prospect in a number of growing industries. The skincare market alone is reportedly worth over $140 billion globally, and Estee Lauder maintains a solid foothold here and across the entire cosmetics space. The company also maintains an intensely engaged and evangelistic following on social media, with many of its brands featuring extensively across most major platforms. 

With a raised outlook for the full fiscal year, and performance to date impressing at every turn, Estee Lauder looks like an extremely promising addition to any portfolio. The company offers multiple engines of growth, global reach, and extensive brand recognition across its entire catalog. While ongoing market volatility and the lingering issues caused by the pandemic could potentially derail some of Estee Lauder’s immediate growth, the firm looks poised to maintain its impressive run over the next number of years.