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Estee Lauder (EL) to Post Q3 Earnings: Is a Beat in Store?

Zacks Equity Research

The Estee Lauder Companies Inc. EL is slated to release third-quarter fiscal 2019 results on May 1. The cosmetics behemoth has a sturdy earnings surprise record, surpassing the Zacks Consensus Estimate by an average of 11.7% in the trailing four quarters.

Let’s see how things are placed ahead of this release.

The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise

The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise | The Estee Lauder Companies Inc. Quote

What to Expect?

The Zacks Consensus Estimate for earnings has gone up by a notch over the past seven days to $1.30, which indicates growth of 11.1% from the year-ago quarter’s figure. Also, the consensus mark for revenues is $3,569 million, indicating a rise of nearly 6% from the figure reported in the year-ago quarter.

Factors Likely to Impact Q3

Acquisitions are likely to drive Estee Lauder’s top line in the quarter to be reported. Notably, the buyouts of BECCA and Too Faced (during first-quarter fiscal 2017) have strengthened the company’s fastest growing prestige portfolio, contributing to the top line. Also, investment in DECIEM is a tailwind. Well, Estee Lauder’s focus on expanding these brands internationally as well as in travel retail and online networks are likely to strengthen customer base and drive performance in the to-be-reported quarter.

Moreover, the company is set to gain on its solid travel retail network in the fiscal third quarter. Estee Lauder’s travel retail has been performing well owing to rise in traffic, effective launches, impressive marketing strategies and unique product range. Markedly, the company is committed toward making additional efforts to enhance conversions through initiatives like better customer insights, augmented merchandising and improved digital marketing. Clearly, rising passenger traffic, favorable fundamentals, higher conversions and increased demand for skincare products will drive the stock in the third quarter.

Additionally, strong online business is expected to be a major growth engine. The company’s mobile sales have been growing considerably, courtesy of the increasing popularity of social media. Estee Lauder focuses on widening its global online presence by adding new sites and expanding retailer distributions. These endeavors along with opportunities in the global prestige beauty industry are likely to reflect on the company’s upcoming results. Moreover, Estee Lauder’s bottom line is poised to benefit from its Leading Beauty Forward initiative, directed toward efficient management of costs and operations.

What the Zacks Model Unveils

Our proven model shows that Estee Lauder is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Estee Lauder’s Zacks Rank #2 combined with an Earnings ESP of +1.16% makes us reasonably confident of an earnings beat.

Other Stocks Poised to Beat Earnings Estimates

Church & Dwight CHD has an Earnings ESP of +0.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inter Parfums IPAR has an Earnings ESP of +5.73% and a Zacks Rank #3.

Campbell Soup CPB has an Earnings ESP of +3.55% and a Zacks Rank #3.

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