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Estee Lauder (EL) Surges 4.6%: Is This an Indication of Further Gains?

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Estee Lauder (EL - Free Report) shares rallied 4.6% in the last trading session to close at $302.11. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 2.2% loss over the past four weeks.

Shares of Estee Lauder have been gaining on optimism surrounding the revival of makeup products usage as pandemic-led restrictions have begun to ease, thanks to mass vaccinations. Incidentally, management in its third-quarter earnings call highlighted that some of its key market regions, such as China and Australia are witnessing recovery in makeup sales, as social engagements gradually normalize. Apart from this, we note that the company has been gaining from sturdy growth in skincare and fragrance brands, which also aided third-quarter performance, wherein top and bottom lines increased year over year. Estee Lauder’s online business has also been doing well, backed by investments to boost consumer’s digital shopping experience.

Price and Consensus

Price Consensus Chart for EL

This beauty products company is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents a year-over-year change of +218.9%. Revenues are expected to be $3.6 billion, up 48.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Estee Lauder, the consensus EPS estimate for the quarter has been revised marginally higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on EL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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