The Estée Lauder Companies Inc. (NYSE:EL) shareholders are probably feeling a little disappointed, since its shares fell 4.2% to US$302 in the week after its latest quarterly results. Results look mixed - while revenue fell marginally short of analyst estimates at US$3.9b, statutory earnings beat expectations 7.1%, with Estée Lauder Companies reporting profits of US$1.24 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Estée Lauder Companies' 20 analysts is for revenues of US$18.0b in 2022, which would reflect a major 22% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 80% to US$6.92. Before this earnings report, the analysts had been forecasting revenues of US$17.9b and earnings per share (EPS) of US$6.86 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$324. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Estée Lauder Companies, with the most bullish analyst valuing it at US$367 and the most bearish at US$217 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Estée Lauder Companies shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Estée Lauder Companies' growth to accelerate, with the forecast 18% annualised growth to the end of 2022 ranking favourably alongside historical growth of 6.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Estée Lauder Companies is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Estée Lauder Companies going out to 2025, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Estée Lauder Companies you should be aware of.
This article by Simply Wall St is general in nature. 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.
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