Risk/Reward Rating: Negative
Estee Lauder is the premier global beauty company, and its stock valuation fully reflects this fact. The company took a hit from COVID due to the closure of physical retail stores; however, it expects to get back to sales growth of 6% to 8% per year over the long-term. While this is respectable growth for a mature company, it is not what one would expect given the lofty valuation.
Valuation: 51x fiscal 2021 earnings estimates (year ends 6-30-21) and 44x fiscal year 2022 earnings estimates. The company is valued at $116 billion or over 7x sales estimates for 2021 and 6.7x 2022 sales estimates. These multiples are well outside historical market norms.
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