Estee Lauder Earnings: Margins Expand, Stock Falls

S&P 500 (NYSE:SPY) component Estee Lauder Companies Inc. (NYSE:EL) reported its results for the third quarter. The Estee Lauder Companies manufacture skin care, makeup, fragrance, and hair care products.

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Estee Lauder Companies Earnings Cheat Sheet for the Third Quarter

Results: Net income for the cosmetics rose to $130.4 million (33 cents per share) vs. $124.7 million (31 cents per share) in the same quarter a year earlier. This marks a rise of 4.6% from the year-earlier quarter.

Revenue: Rose 3.8% to $2.25 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Estee Lauder Companies Inc. fell in line with the mean analyst estimate of 33 cents per share. Analysts were expecting revenue of $2.25 billion.

Quoting Management: Fabrizio Freda, President and Chief Executive Officer, said, “Our third quarter sales came in slightly ahead of our forecast and, importantly, we were able to leverage part of that growth into an overachievement of earnings per share. Driving our performance are focused investments on our distinctive product innovations, supported by strong creative capabilities and elevated high-touch services. These elements provide a foundation for continuous growth and, coupled with cost savings and productivity improvements, increased and sustainable profitability. On the strength of our brands, we posted across-the-board sales gains in our regions, strong skin care growth and increases in most channels, while further generating substantial gross margin improvements.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 15.4% and in the first quarter, the figure rose 45.8%.

Revenue has risen for the last four quarters. Revenue increased 9.9% to $2.74 billion in the second quarter. The figure rose 18.4% in the first quarter from the year earlier and climbed 12% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has met estimates for two consecutive quarters. It reported net income of $1.01 in the second quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from 14 cents a share to 20 cents over the last ninety days. For the fiscal year, the average estimate has moved down from $2.28 a share to $2.25 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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