Estee Lauder stock (NYSE: EL) currently trades at $140 per share, 52% below the level seen in March 2021, and it appears undervalued. EL stock was trading at around $255 in early June 2022, just before the Fed started increasing rates, and is now 45% below that level, compared to 16% gains for the S&P 500 during this period. This underperformance of EL stock can be attributed to slowing sales growth, partly due to a slower recovery in Asia travel. Its profitability has also been adversely impacted in the recent past due to increased input costs and higher marketing spending, among other factors.
Looking at a slightly longer term, EL stock has suffered a sharp decline of 45% from levels of $265 in early January 2021 to around $140 now, vs. an increase of about 15% for the S&P 500 over this roughly 3-year period. However, the decrease in EL stock has been far from consistent. Returns for the stock were 39% in 2021, -33% in 2022, and -44% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 13% in 2023 – indicating an underperformance for the ticker in 2022 and 2023.
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