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Estee Lauder (EL) Gains From Buyouts & Solid Online Business
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With rising consumer spending on beauty products along with rapidly changing cultural ideals, catalyzed by social media and e-commerce platforms, firms such as The Estee Lauder Companies Inc. (EL - Free Report) have reasons to continue looking attractive in investors’ eyes.
Well, shares of this leading cosmetics company surged 73.2% in a year, comfortably outperforming the industry’s rally of 39.9%. This Zacks Rank #2 (Buy) company has been reporting strong results across most geographic regions and product categories, fueled by strategic acquisitions, strong online business and effective management policies.
Let’s take a closer look at some of the aspects driving the company’s spectacular performance and see if it can add laurels to its growth story.
Acquisitions: A Vital Growth Driver
Estee Lauder has made several strategic acquisitions to enhance its portfolio. The acquisitions of BECCA and Too Faced in the past strengthened its fastest growing prestige portfolio and contributed nearly 2 percentage points to sales growth in the second quarter of fiscal 2018. Also, management expects these brands to contribute roughly 2 percentage points to the company’s overall sales growth in fiscal 2018. The investment in DECIEM — a fast-growing multi-brand company — is likely to aid beauty sales in the forthcoming periods.
Robust Online Business
Estee Lauder has a strong online business and the company expects it to be a major growth catalyst in the upcoming years. The company has been constantly implementing digital experiences such as online booking for each store appointment, omni-channel loyalty programs and advanced mobile services. These initiatives have been boosting the company’s online sales for a while, and boosting its overall top line. During second-quarter fiscal 2018, online sales were strong and primarily driven by a robust holiday-season performance. Owing to technological advancement and the increasing popularity of social media, mobile sales have been growing considerably. In fact, mobile sales soared more than 70% during the key holiday period. Further, Estee Lauder is focused on widening its global online presence by adding new sites and expanding retailer distributions.
Travel Retail Opens up Business Expansion Prospects
Estee Lauder has been strongly focusing on enhancing travel retail business, which has lately emerged onto becoming a major sales driver for the company. Management stated that growth in this category is majorly fueled by the company’s continued investments in emerging markets, particularly in Asia, along with double-digit increases in five of its biggest brands in the travel retail network. Well, the company is committed toward undertaking greater strategic efforts to enhance travel retail business. Vital endeavors in this regard include better customer insights, merchandising efficiency and digital marketing efforts.
Wrapping it Up
Despite persisting concerns surrounding lower sales in North America due to a decline in retail traffic in the U.S. brick-and-mortar stores, Estee Lauder is likely to overcome such hurdles on the back of well-chalked initiatives. Moreover, management expects continued growth opportunities in the global prestige beauty industry, which is projected to grow 5% in fiscal 2018. Additionally, acquisitions, better-quality products, innovation, improved market reach and gains from the recently enacted tax reforms are expected to aid performance in the forthcoming periods. With such positive factors rolled up in its sleeves, Estee Lauder is expected to continue growing and attain new highs.
United Natural came up with an average positive earnings surprise of 2.3% in the trailing four quarters. It has a long-term earnings growth rate of 6.2%.
Tyson Foods pulled off an average positive earnings surprise of 4.7% in the trailing four quarters. It has a long-term earnings growth rate of 11%.
Sysco delivered an average positive earnings surprise of 1.1% in the trailing four quarters. It has a long-term earnings growth rate of 10.1%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Estee Lauder (EL) Gains From Buyouts & Solid Online Business
With rising consumer spending on beauty products along with rapidly changing cultural ideals, catalyzed by social media and e-commerce platforms, firms such as The Estee Lauder Companies Inc. (EL - Free Report) have reasons to continue looking attractive in investors’ eyes.
Well, shares of this leading cosmetics company surged 73.2% in a year, comfortably outperforming the industry’s rally of 39.9%. This Zacks Rank #2 (Buy) company has been reporting strong results across most geographic regions and product categories, fueled by strategic acquisitions, strong online business and effective management policies.
Let’s take a closer look at some of the aspects driving the company’s spectacular performance and see if it can add laurels to its growth story.
Acquisitions: A Vital Growth Driver
Estee Lauder has made several strategic acquisitions to enhance its portfolio. The acquisitions of BECCA and Too Faced in the past strengthened its fastest growing prestige portfolio and contributed nearly 2 percentage points to sales growth in the second quarter of fiscal 2018. Also, management expects these brands to contribute roughly 2 percentage points to the company’s overall sales growth in fiscal 2018. The investment in DECIEM — a fast-growing multi-brand company — is likely to aid beauty sales in the forthcoming periods.
Robust Online Business
Estee Lauder has a strong online business and the company expects it to be a major growth catalyst in the upcoming years. The company has been constantly implementing digital experiences such as online booking for each store appointment, omni-channel loyalty programs and advanced mobile services. These initiatives have been boosting the company’s online sales for a while, and boosting its overall top line. During second-quarter fiscal 2018, online sales were strong and primarily driven by a robust holiday-season performance. Owing to technological advancement and the increasing popularity of social media, mobile sales have been growing considerably. In fact, mobile sales soared more than 70% during the key holiday period. Further, Estee Lauder is focused on widening its global online presence by adding new sites and expanding retailer distributions.
Travel Retail Opens up Business Expansion Prospects
Estee Lauder has been strongly focusing on enhancing travel retail business, which has lately emerged onto becoming a major sales driver for the company. Management stated that growth in this category is majorly fueled by the company’s continued investments in emerging markets, particularly in Asia, along with double-digit increases in five of its biggest brands in the travel retail network. Well, the company is committed toward undertaking greater strategic efforts to enhance travel retail business. Vital endeavors in this regard include better customer insights, merchandising efficiency and digital marketing efforts.
Wrapping it Up
Despite persisting concerns surrounding lower sales in North America due to a decline in retail traffic in the U.S. brick-and-mortar stores, Estee Lauder is likely to overcome such hurdles on the back of well-chalked initiatives. Moreover, management expects continued growth opportunities in the global prestige beauty industry, which is projected to grow 5% in fiscal 2018. Additionally, acquisitions, better-quality products, innovation, improved market reach and gains from the recently enacted tax reforms are expected to aid performance in the forthcoming periods. With such positive factors rolled up in its sleeves, Estee Lauder is expected to continue growing and attain new highs.
Greedy for Consumer Staples Stocks? Check These
Investors interested in the same sector may consider the likes of United Natural Foods (UNFI - Free Report) , Tyson Foods, Inc. (TSN - Free Report) and Sysco (SYY - Free Report) , all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
United Natural came up with an average positive earnings surprise of 2.3% in the trailing four quarters. It has a long-term earnings growth rate of 6.2%.
Tyson Foods pulled off an average positive earnings surprise of 4.7% in the trailing four quarters. It has a long-term earnings growth rate of 11%.
Sysco delivered an average positive earnings surprise of 1.1% in the trailing four quarters. It has a long-term earnings growth rate of 10.1%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>