If a stock hits a 10-year low, there's little doubt that buying it involves taking on some considerable risk. For that kind of a sell-off to take place, investors are rushing for the exits and likely have some serious reservations about the company's future and perhaps whether it will be able to survive.

Estée Lauder Companies (NYSE: EL) recently plunged to levels it hasn't been at in more than a decade. As of Monday's close, the stock was down a mammoth 56% this year. Let's dive into the problems which are plaguing Estée Lauder and see if this badly beaten-down stock is heading for an even greater decline, or if it could make for a good contrarian buy right now.

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Estée Lauder's top and bottom lines have been going in the wrong direction

Business simply hasn't been strong in recent years for Estée Lauder. Revenue has been declining, and profits have been falling at an even faster rate. With a one-two punch like this, it's little wonder the stock has been in such a disastrous tailspin.

On its most recent earnings report, which the company released last month, Estée Lauder cited a weak market, particularly in China, where consumer sentiment was worsening. The company wasn't even terribly optimistic that stimulus measures in the country would be able to turn things around anytime soon.

To cap things off, the company also announced it would be slashing its quarterly dividend to $0.35, which is a reduction of 47%. For investors who may have been willing to be patient with the cosmetics company in the hopes of a turnaround, that undoubtedly gave them even less of a reason to hold on and led to more of a decline in the share price.

Is Estée Lauder a cheap stock to own?

Estée Lauder has been struggling with profitability in recent quarters, which has resulted in the stock's price-to-earnings (P/E) multiple skyrocketing to more than 100. But even based on analyst projections, it's trading at nearly 37 times next year's profits, which is a high multiple for a business that isn't growing. The stock is trading at 1.5 times its trailing revenue, which may seem modest, but that too may be of little comfort to investors if the top line continues to fall.

Not only does the company need to find a way to grow its business, but it also needs to do so while improving its bottom line. For the quarter ending Sept. 30, Estée Lauder's selling, general, and administrative expenses accounted for 94% of its gross profit. Even though the company is achieving strong gross profit margins of more than 70%, it needs to reduce its overhead to stay out of the red.