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Let's talk about the popular The Estée Lauder Companies Inc. (NYSE:EL). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$204 at one point, and dropping to the lows of US$150. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Estée Lauder Companies' current trading price of US$156 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Estée Lauder Companies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Estée Lauder Companies
Is Estée Lauder Companies Still Cheap?
According to my valuation model, Estée Lauder Companies seems to be fairly priced at around 7.0% below my intrinsic value, which means if you buy Estée Lauder Companies today, you’d be paying a fair price for it. And if you believe that the stock is really worth $167.45, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Estée Lauder Companies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Estée Lauder Companies generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Estée Lauder Companies' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in EL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?