Estée Lauder is a world-renowned manufacturer of premium cosmetics, fragrances, skincare, and hair products. Some of the company's major brands include Clinique, MAC, Bobbi Brown, Tom Ford, Jo Malone, and La Mer. The company operates in over 150 locations globally and distributes its products through a network of department and freestanding stores, speciality retailers and e-commerce channels.
The business had a tough start to its FY23 financial year. In the second quarter to the end of December, organic sales fell 11%. Adjusted earnings per share fell 9% - although this beat expectations. China was a major drag - a situation which could reverse itself in the last two quarters of the year.
Technically, the stock is trading above its 2x1 Gann angle (see the black fan-type trendlines on the main chart as well as the insert) making it an attractive investment opportunity. Essentially, the stock is trading in an uptrend.
EL is trading above its 200-day simple moving average of ~$243.50 - a positive indicator of its current trajectory.
Strong upside momentum according to the MACD indicator, as well as upwards movement of the OBV indicator, supports our bullish stance.
Share Information
| Share code | EL US |
|---|---|
| Industry | Household & Personal Products |
| Market capatalisation (USD) | 91.54 billion |
| One year total return | -5.68% |
| Return year-to-date | 3.57% |
| Current price(USD) | 256.27 |
| 52 weeek high(USD) | 285.79 |
| 52 week low(USD) | 186.47 |
| Financial year end | June |
| Closing paragraph | We expect moderate price volatility going forward. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 7.24 | 4.97 | 7.31 | 8.57 |
| Growth (%) | -31.35 | 46.98 | 17.37 | |
| Dividend Per Share (USD) | 2.33 | 2.59 | 2.84 | 3.16 |
| Growth (%) | 11.03 | 9.59 | 11.32 | |
| Forward PE (times) | 51.56 | 35.08 | 29.89 | |
| Forward Dividend Yield (%) | 1.01 | 1.11 | 1.23 | |
| Closing paragraph | Earnings growth in FY23 will be heavily impacted by persistent inflationary pressures on the supply chain. These pressures, however, are set to subside in FY24, and growth will be further supported by recovering demand in China. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position |
AAPL - Profit Take (Close the position) |
XLK - Profit Take (Close the position) |
CBOE - Buy (Continue to Hold) |
|---|---|---|---|
| Entry | 153.71 | 139.66 | 127.18 |
| Current | 166.47 | 149.65 | 137.20 |
| Movement | 8.3% | 7.2% | 7.9% |
| Summary text | Exit the trade to reduce overall portfolio exposure. | Exit the trade to reduce overall portfolio exposure. |
The defensive nature of the stock remains of interest. The price remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $144.00 with a trailing stop-loss at $130.70. Exit the position on 2 June 2023. |
| Share Name and position |
MA - Buy (Continue to Hold) |
MSFT - Buy (Continue to hold) |
CBOE - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 354.44 | 276.20 | 178.01 |
| Current | 372.32 | 288.37 | 184.83 |
| Movement | 5.0% | 4.4% | 3.8% |
| Summary text |
The stock price is showing an incomplete ascending triangle pattern and trading above its 200-day simple moving average. The stock is testing its 23.6% Fibonacci retracement level.
Our profit target is $395.00, with a trailing stop-loss of $355.80. Exit the position around 26 May 2023. |
The stock price recently breached a major resistance level. The stock is trading above its 200-day simple moving average, but upside momentum has halted - a concern to the bullish trend.
Our profit target is $300.00, with a trailing stop-loss of $270.30. Exit the position around 9 June 2023. |
The stable bullish trend remains of interest. The stock price remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is $200.00 with a trailing stop-loss of $179.00. Exit the position on 10 May 2023. |
