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5 Reasons Why Estee Lauder (EL) Should Be in Your Portfolio
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Several macroeconomic issues have recently spiked volatility in the global market. The uncertainty about ‘Brexit’ – the potential British exit from the European Union – and the Fed’s decision about the interest rate have made investors jittery about investing in high-risk stocks. Moreover, they are resorting to government bonds and gold.
Consumer Staples Provides Stability
Amid these macro issues, investing in safe haven sector is important and consumer staple sector is one such defensive sector. The sector fared well in the first-quarter 2016 earnings season. Buoyed by a strong manufacturing sector, consumer staples reported modest growth in the recently concluded first quarter of 2016. A dip in gas prices, and increasing consumer confidence did the trick for these stocks.
Here, we focus on one consumer staples stock – The Estee Lauder Companies Inc. (EL - Free Report) – which can be a good choice for investors…
Why Estee Lauder Is a Good Choice
Low Beta Stock: Estee Lauder has a beta of 0.95. A stock with less than 1 beta suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment.
Rank and Estimates: Estee Lauder, a Zacks Rank #2 (Buy) stock, has had a healthy run on the bourse so far this year, gaining around 6.04%. Over the past 60 days, analysts have become increasingly bullish on the company, with 8 out of 11 estimates moving upwards for fiscal 2016..
Quarterly Results and Outlook: Estee Lauder’s third-quarter fiscal 2016 earnings and revenues beat the Zacks Consensus Estimate, thanks to new product launches and strong sales of luxury fragrances. Earnings of $0.73 per share inched up 2.8% year over year on 0.4% growth in revenues. Sales improved across all geographies, except for Asia Pacific.
Meanwhile, the company raised its earnings guidance for fiscal 2016 to reflect a slight moderation in foreign currency translation. The company expects adjusted earnings in the range of $3.09 to $3.14 per share for fiscal 2016, compared with the prior guidance of $3.07 to $3.12, including negative foreign currency and acquisitions impact.
Strong Portfolio and Leadership in the Cosmetics industry: Estee Lauder boasts an extensive portfolio of globally recognized brands like Estee Lauder, M-A-C, Jo Malone London, Smashbox, Bobbi Brown and Tom Ford. The company also focuses on innovation in order to diversify its collection. A special collection of makeup and skin care – The Estee Edit – was launched under the Estee Lauder brand in Mar 2016.
The range primarily targets the North American Sephora stores and the premium consumers who visit these outlets in the U.S. and Canada. Further, the company recently launched Estée Lauder Advanced Night Repair PowerFoil Mask, which was well received, particularly in Asia, and boosted the brand's Advanced Night Repair franchise. The company also promotes its brands through celebrity tie-ups.
e-commerce Business:Estee Lauder’s e-Commerce business has doubled over the last four years which encourages the company to invest in it for future growth as well. The company records as many as 325 million visitors on its website each year. It also operates 13 m-Commerce sites, including three in China for Clinique, La Mer and Origins.
Other favorably ranked stocks in the consumer staple sector are Altria Group Inc. (MO - Free Report) , Tyson Foods Inc. (TSN - Free Report) and Reynolds American Inc. , all carrying a Zacks Rank #2 (Buy).
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5 Reasons Why Estee Lauder (EL) Should Be in Your Portfolio
Several macroeconomic issues have recently spiked volatility in the global market. The uncertainty about ‘Brexit’ – the potential British exit from the European Union – and the Fed’s decision about the interest rate have made investors jittery about investing in high-risk stocks. Moreover, they are resorting to government bonds and gold.
Consumer Staples Provides Stability
Amid these macro issues, investing in safe haven sector is important and consumer staple sector is one such defensive sector. The sector fared well in the first-quarter 2016 earnings season. Buoyed by a strong manufacturing sector, consumer staples reported modest growth in the recently concluded first quarter of 2016. A dip in gas prices, and increasing consumer confidence did the trick for these stocks.
Here, we focus on one consumer staples stock – The Estee Lauder Companies Inc. (EL - Free Report) – which can be a good choice for investors…
Why Estee Lauder Is a Good Choice
Low Beta Stock: Estee Lauder has a beta of 0.95. A stock with less than 1 beta suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bets at the moment.
Rank and Estimates: Estee Lauder, a Zacks Rank #2 (Buy) stock, has had a healthy run on the bourse so far this year, gaining around 6.04%. Over the past 60 days, analysts have become increasingly bullish on the company, with 8 out of 11 estimates moving upwards for fiscal 2016..
Quarterly Results and Outlook: Estee Lauder’s third-quarter fiscal 2016 earnings and revenues beat the Zacks Consensus Estimate, thanks to new product launches and strong sales of luxury fragrances. Earnings of $0.73 per share inched up 2.8% year over year on 0.4% growth in revenues. Sales improved across all geographies, except for Asia Pacific.
Meanwhile, the company raised its earnings guidance for fiscal 2016 to reflect a slight moderation in foreign currency translation. The company expects adjusted earnings in the range of $3.09 to $3.14 per share for fiscal 2016, compared with the prior guidance of $3.07 to $3.12, including negative foreign currency and acquisitions impact.
Strong Portfolio and Leadership in the Cosmetics industry: Estee Lauder boasts an extensive portfolio of globally recognized brands like Estee Lauder, M-A-C, Jo Malone London, Smashbox, Bobbi Brown and Tom Ford. The company also focuses on innovation in order to diversify its collection. A special collection of makeup and skin care – The Estee Edit – was launched under the Estee Lauder brand in Mar 2016.
The range primarily targets the North American Sephora stores and the premium consumers who visit these outlets in the U.S. and Canada. Further, the company recently launched Estée Lauder Advanced Night Repair PowerFoil Mask, which was well received, particularly in Asia, and boosted the brand's Advanced Night Repair franchise. The company also promotes its brands through celebrity tie-ups.
e-commerce Business:Estee Lauder’s e-Commerce business has doubled over the last four years which encourages the company to invest in it for future growth as well. The company records as many as 325 million visitors on its website each year. It also operates 13 m-Commerce sites, including three in China for Clinique, La Mer and Origins.
ESTEE LAUDER Price, Consensus and EPS Surprise
ESTEE LAUDER Price, Consensus and EPS Surprise | ESTEE LAUDER Quote
Other Key Picks
Other favorably ranked stocks in the consumer staple sector are Altria Group Inc. (MO - Free Report) , Tyson Foods Inc. (TSN - Free Report) and Reynolds American Inc. , all carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>