Here’s Why Estee Lauder Stock Has Rallied More Than 2x Since Late 2018
Estee Lauder (NYSE: EL) stock price grew more than 2x from around $130 in 2018 end to almost $270 currently, primarily due to favorable changes in its P/S multiple. This does not come as a surprise, as the company has also witnessed a rise in revenue over this period, and revenue per share has risen, helped by a slight decrease in the outstanding share count.
In our interactive dashboard, Why Estee Lauder Stock Moved: EL Stock Has Gained 107% Since 2018, we break down the factors behind this move.
(A) EL’s Total Revenue has grown 30% from $13.7 billion in 2018 to $17.7 billion on an LTM basis
- EL’s total revenue first rose from $13.7 billion in FY ’18 (EL’s fiscal year ends in June) to $14.9 billion in FY ’19, driven by rising demand from the US and emerging markets.
- Revenues then dropped to $14.3 billion in FY ’20 due to the pandemic but have since recovered strongly and currently stand even higher at $17.7 billion on an LTM basis.
- Skin Care sales make up the bulk of EL’s revenues, with $9.48 billion of the company’s sales coming from this segment as of FY ’21, making up almost 60% of total revenue.
- For details about EL revenues and comparison to peers, see Estee Lauder (EL) Revenue Comparison
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(B) Revenue per share (RPS) increased 32% from $37.17 in 2018 to $49.22 currently
- EL revenue rose from $13.7 billion in 2018 to $17.7 billion currently, while the outstanding share count decreased from 368 million in 2018 to 360 million currently.
- Due to this, RPS has risen strongly from $37.17 in FY ’18 to $49.22 currently.
(C) Price-To-Sales (P/S) multiple for EL rose steadily from 3.4x in 2018 to 8.3x in 2021, but stands at 5.5x currently, still more than 1.5x higher than its 2018 level
- Due to EL’s strong performance since 2018-end, its P/S multiple increased from 3.4x in 2018 to over 8x in 2021.
- However, amidst current geopolitical tensions dragging down the broader markets, the P/S multiple has pulled back and currently stands at around 5.5x.
- For additional details about the company’s historical returns and comparison to peers, see Estee Lauder (EL) Stock Return.
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| Returns | Mar 2022 MTD [1] |
2022 YTD [1] |
2017-22 Total [2] |
| EL Return | -5% | -24% | 267% |
| S&P 500 Return | -2% | -10% | 91% |
| Trefis MS Portfolio Return | -3% | -12% | 245% |
[1] Month-to-date and year-to-date as of 3/9/2022
[2] Cumulative total returns since the end of 2016
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