3 key takeaways from Estee Lauder’s Q3 earnings report

Written by: Wajeeh Khan
May 3, 2021
  • Estee Lauder's sales come in shy of Wall Street estimates in the third quarter.
  • The cosmetics and beauty company reports a better-than-expected profit.
  • Estee Lauder Companies now forecasts an up to 12% growth in sales this year.

Estee Lauder Companies Inc. (NYSE: EL) said on Monday its sales fell shy of Wall Street estimates in the fiscal third quarter. The company, however, reported a better-than-expected quarterly profit.

1. Financial performance

Estee Lauder said that its net income in the third quarter printed at £328.75 million that translates to 89 pence per share. In the same quarter last year, it had posted £4.33 million of net loss or 1.44 pence per share.

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Adjusted for non-recurring items, the cosmetics and beauty company earned £1.15 per share in the quarter that concluded on 31st March. Estee Lauder generated £2.78 billion of sales in Q3 – an increase from £2.42 billion last year.

According to FactSet, experts had forecast the company to post a higher £2.84 billion of sales in the recent quarter. Their estimate for adjusted per-share earnings was capped at a lower 95 pence. In the prior quarter (Q2), the American multinational had noted a 5% increase in sales.

2. Guidance for the full year

For the full financial year, Estee Lauder is now forecasting an up to 12% growth in sales. It expects its per-share earnings to fall in the range of £4.36 to £4.43 in fiscal 2021. In comparison, analysts are calling for £4.33 of adjusted EPS this year.

3. Chief Executive Fabrizio Freda’s remarks

Commenting on the earnings report on Monday, CEO Fabrizio Freda said:

“We exceeded our sales and earnings expectations, even as several markets experienced increasing pressure from COVID-19 throughout the quarter.”

Several countries in Latin America and Western Europe imposed new restrictions in recent months to check the fast spread of the novel flu-like virus. In separate news from the United States, Dell sold its Boomi cloud business to TPG and Francisco Partners (private equity firms) for $2.88 billion, including debt.

Impact on the share price

Estee Lauder shares were reported more than 5% down in premarket trading on Monday. Including the price action, the stock is now exchanging hands at £218.69 per share. In comparison, the NYSE-listed company had started the year at a lower £183.84 per share. The price action should come in handy if you are interested in investing in the stock market.

Estee Lauder performed largely upbeat in the stock market last year with an annual gain of more than 30%. At the time of writing, it is valued at £82 billion and has a price to earnings ratio of 125.58.