Estée Lauder stock jumps 13% after earnings beat and margin outlook

Estée Lauder Companies EL shares rose about 13% in premarket trading Wednesday after the beauty products maker reported fourth-quarter results above Wall Street expectations and raised its adjusted operating-margin outlook for fiscal 2027.

The company reported fourth-quarter adjusted earnings of 39 cents per share, compared with the 32-cent consensus estimate.

Revenue increased 6% to USD 3.6 billion (approx. $5.3 billion), exceeding estimates of about USD 3.6 billion (approx. $5.2 billion).

Organic sales rose 5%, marking the fourth consecutive quarter of organic growth.

For the full fiscal year, adjusted earnings per share increased to $2.51 from $1.51 a year earlier and topped the $2.43 consensus estimate. Net sales rose 5% to USD 15.1 billion (approx. $21.9 billion), while organic net sales increased 3%.

CEO Stéphane de La Faverie said the company ended the year with stronger organic sales growth and profitability, while highlighting efforts to diversify growth across product categories and geographies.

The results came after several analysts had positioned for improvement.

Citi had placed Estée Lauder on a 90-day upside catalyst watch tied to the earnings report while maintaining a Buy rating, while Jefferies had raised its price target ahead of the results.

Piper Sandler had also expected skincare growth to rebound after being flat in the previous quarter.

Fragrance and skincare support growth

The company's return to growth has been supported by demand for premium fragrances and skincare products.

Estée Lauder said its luxury fragrance brands Le Labo and Tom Ford drove a 10% increase in net sales during the fourth quarter.

Le Labo benefited from broader distribution and efforts to expand its customer base.

The company has also accelerated premium product launches and increased investment in innovation and marketing as part of its Beauty Reimagined strategy.

Estée Lauder said resilient spending among affluent and younger consumers, particularly on trending products, has helped support demand for its luxury offerings.

The company expects continued growth in fragrance and skincare during fiscal 2027, while anticipating a return to full-year growth in makeup.

The Middle East conflict reduced fourth-quarter consolidated sales growth by 1 percentage point.

The company also received USD 38 million (approx. $55.4 million) in tariff refunds during the quarter, partially offsetting the USD 102 million (approx. $148.6 million) full-year gross impact of incremental tariffs.

Estée Lauder said it currently expects no material impact from the Middle East conflict on fiscal 2027 results.

Margin outlook raised for fiscal 2027

Profitability improved alongside the return to sales growth. Full-year adjusted operating margin expanded by 320 basis points to 11.2%, helped by restructuring and efficiency initiatives.

For fiscal 2027, the company maintained its organic sales growth outlook at a 4% midpoint.

However, it raised the midpoint of its adjusted operating-margin guidance to 13.1% from 12.75% previously. The company now expects adjusted operating margin between 12.7% and 13.5%, compared with its earlier range of 12.5% to 13%.

Estée Lauder expects adjusted earnings per share of $3.10 to $3.35, putting the midpoint above analysts' estimate of $3.18.

The company's restructuring plan is expected to deliver about USD 1.2 billion (approx. $1.7 billion) in gross benefits and result in a net reduction of approximately 10,000 positions.

Despite the latest gains, Estée Lauder shares have declined about 19.5% in 2026, compared with a 12.4% increase in the benchmark index.

Sharp earnings-driven moves like Wednesday's often prompt retail investors to react quickly, with many doing so through trading apps that allow real-time trading.

The company's latest results and improved margin outlook provide investors with new indicators of progress in its turnaround strategy.