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Estée Lauder Companies announced a quarterly dividend and released new corporate guidance recently. Meanwhile, global indices, including the S&P 500 and Dow, witnessed positive momentum due to robust earnings from tech giants like Microsoft and Meta. While the broader market experienced a 2.7% rise, Estée Lauder's 4.72% price increase amidst less favorable earnings could reflect investor interest buoyed by dividend affirmation, despite the challenging sales outlook. The continuation of positive market sentiment likely outweighed Estée Lauder's softer earnings news, contributing to its stock performance aligning with the broader market’s upward trend.
Estée Lauder Companies has 2 risks we think you should know about.
The recently announced quarterly dividend and corporate guidance from Estée Lauder Companies arrived as broader market indices, like the S&P 500 and Dow, experienced upward momentum due to robust performances from technology giants. While Estée Lauder's 4.72% share price increase demonstrates some positive investor sentiment, it's worth noting the company's longer-term performance, with a total return, including dividends, dropping significantly by 51.86% over the past year. Compared to the broader US market, which saw a 9.6% rise, Estée Lauder has notably underperformed. Within the US Personal Products industry, Estée Lauder also lagged, as the industry itself declined by 24.1% over the same period.
The affirmation of the dividend amidst less favorable earnings could signal confidence in Estée Lauder's future plans to leverage AI and undergo restructuring as outlined in their Beauty Reimagined strategic plan. Expansion into high-growth markets and improving operating leverage remain central to enhancing future revenue and earnings. Analysts are forecasting a 1.8% annual revenue growth and a trajectory towards profitability, with earnings expected to reach US$1.3 billion by 2028. The current share price of US$59.59 suggests a 16.0% discount to the consensus price target of US$70.94, highlighting potential upside if future strategic initiatives bear fruit.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.