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Earnings Preview: Estee Lauder

EL

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Estee Lauder Companies Inc. (EL - Analyst Report) is set to report its fourth quarter and fiscal 2012 results before the opening bell on August 14, 2012. The Zacks Consensus Estimate for the fourth quarter is 16 cents on revenues of $2.2 billion. For fiscal 2012, the Zacks Consensus Estimate is $2.26 on revenues of $9.7 billion.

During the third quarter fiscal 2012 earnings conference call, the company said that it expects fourth quarter fiscal 2012 diluted net earnings per common share to be between 11 cents to 16 cents. For fiscal 2012, the company maintained its earnings guidance range of $2.21 to $2.26.

Third Quarter Recap

Estee Lauder’s third quarter of fiscal 2012 earnings of 38 cents per share climbed 7% year over year. The earnings moved past the Zacks Consensus Estimate of 33 cents.

Profits during the quarter were aided by focused investments on product innovations coupled with strong creative capabilities and improved high-touch services.

Net sales for the quarter rose to $2.3 billion from $2.2 billion in the prior-year quarter. The quarterly sales matched the Zacks Consensus Revenue Estimate.

Read our full report at Estee Lauder Matches Rev, EPS Beats

Agreement of Estimate Revisions

Over the past 7 days, none of the 16 estimates moved in either direction for both the fourth quarter and for the fiscal year. However, in the last 30 days one of the 16 estimates moved downward for both the fourth quarter as well as the fiscal year.

Magnitude of Estimate Revisions

Given the limited estimate revisions, the consensus estimate for the fourth quarter of fiscal 2012 has remained static over the last 7 and 30 days at 16 cents. The consensus estimate for fiscal 2012 has also remained static at $2.26 over the last 7 as well 30 days.

Surprise History

Over the last four quarters, Estee Lauder has surpassed estimates twice and matched two times, thereby resulting in an average earnings surprise of 15.91%. In the previous four quarters the company recorded a maximum positive surprise of 16.67% in the first quarter of fiscal 2012.

Our Recommendation

New York-based Estee Lauder Companies is one of the world's leading manufacturers and marketers of skin care, makeup, fragrance, and hair care products.

We are encouraged by the recent acquisitions of the Justin Bieber and Nicky Minaj fragrance brands from Give Back Brands LLC in July, 2012. It came close on heels of the buyout of the global licenses and certain related assets for the Ed Hardy, True Religion and BCBGMAXAZRIA fragrance brands from New Wave Fragrances, LLC on May 31, 2012. The slew of acquisitions added many famous and popular brands to the company’s portfolio, which are expected to boost sales.

However, slow recovering developed economies, slow job growth, high interest rates and still tightened credit availability continues to hurt costumer discretionary spending. Hence the stock carries a Zacks #3 Rank (a short-term Hold rating).

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