Estée Lauder: Double-Digit Sales Rebound In Q1, More To Come In FY22

(Preview) Company Update (EL US) (Buy)

Summary

• Estée Lauder's rebound from COVID-19 continued in Q1 FY22, with sales up double digits organically in all regions and up 18% for the group.

• Management reaffirmed the outlook for a 12%-15% EPS growth in FY22, and 2-year growth rates showed long-term structural growth.

• The recovery from COVID-19 is still incomplete, which means there is sizeable potential left in key regions and segments.

• The dividend has been raised 13% (to a 0.7% Dividend Yield), and buybacks have continued. Shares are at 46x expected FY22 EPS.

• With shares at $338.62, we expect a total return of 30% (7.5% annualized) by June 2025, attractive for such a unique asset. Buy.

Introduction

Shares in The Estée Lauder Companies Inc. rose 4.1% yesterday (Tuesday, November 2) after the company released Q1 FY22 results.

We initiated our Buy rating on Estée Lauder in early April 2020 (PRO subscription required), and have reiterated it regularly since. During our coverage EL's share price has more than doubled, including a gain of…