Are You Buying Estée Lauder Stock Here? I Have A Better Idea!

Summary

In this video, the presenter analyzes Estée Lauder's recent stock performance, which has seen a significant drop to 2013 levels, and compares it to Ulta. The discussion includes financial comparisons between 2013 and 2024, highlighting revenue, profits, and liabilities. The presenter also emphasizes the high PE ratio of Estée Lauder compared to Ulta, making the latter a more attractive investment despite the lower price. While acknowledging the potential for recovery, the presenter prefers Ulta for both short-term swing trades and long-term growth, while advising caution with Estée Lauder due to its high valuation and challenging market conditions.

Takeaways

• 😀 Estee Lauder's stock dropped to $63, a price level not seen since 2013.
• 😀 The video compares Estee Lauder’s 2024 financials with its 2013 performance, showing growth in revenue, gross profits, and operating income.
• 😀 While Estee Lauder’s financials have improved, its liabilities have also increased, which needs to be considered when evaluating the stock.
• 😀 The stock price is down by over 50% from its pre-COVID highs, making it seem like a potential buying opportunity for some investors.
• 😀 The consumer market is weakening, particularly in China and Japan, which could affect Estee Lauder's recovery prospects.
• 😀 Estee Lauder's high PE ratio of 49 makes it a less attractive investment compared to Ulta, whose PE ratio is only around 15.
• 😀 Ulta’s lower PE ratio suggests it has more growth potential, making it a more favorable choice for long-term investment and swing trading.
• 😀 Warren Buffett has invested in Ulta, which further strengthens its perceived value and long-term growth prospects.
• 😀 Despite Estee Lauder’s drop in price, the video suggests that its recovery to previous highs may not happen anytime soon due to its high PE ratio and market challenges.
• 😀 The presenter prefers Ulta over Estee Lauder for both long-term investments and short-term swing trades due to its more favorable valuation.
• 😀 The video emphasizes the importance of considering the PE ratio when comparing stocks, as it plays a crucial role in identifying investment opportunities.

Q & A

Why did Estee Lauder's stock experience a significant drop in the video?

Estee Lauder's stock experienced a significant drop due to some news that caused a gap down in the price, bringing it back to levels not seen since 2013. This drop occurred in the context of a weakening global economy and consumer sentiment.

How does Estee Lauder's stock price today compare to 2013?

The stock price of Estee Lauder is currently at around $63, which is the same level the stock reached back in 2013. Despite this, the company's financials have significantly improved since then, with revenue, gross profit, and operating income growing by 30-45%.

What financial numbers are being compared between 2013 and 2024?

The video compares key financial metrics such as revenue, gross profit, operating income, and balance sheet data between 2013 and 2024. These numbers show significant growth in revenue and profits for Estee Lauder over the past decade.

What impact did the COVID-19 crash have on Estee Lauder's stock price?

During the COVID-19 market crash, Estee Lauder's stock dropped to about $80, but since then, it has fallen further to $68. This is less than half of the price it was at during the crash, reflecting ongoing market volatility and the company's struggles.

What is the P/E ratio of Estee Lauder, and why is it significant?

Estee Lauder's current P/E ratio is 49, which is considered high. This is significant because it suggests that investors are paying a premium for the stock relative to its earnings. A high P/E ratio can indicate expectations of strong future growth, but it also means there may be less upside potential compared to stocks with lower P/E ratios.

How does Ulta's stock compare to Estee Lauder's stock in terms of P/E ratio?

Ulta's P/E ratio is much lower, sitting at around 15, compared to Estee Lauder's P/E ratio of 49. This makes Ulta appear cheaper, despite its higher stock price, and suggests that Ulta may offer more potential for growth relative to its valuation.

What are the main reasons the video presenter prefers Ulta over Estee Lauder?

The video presenter prefers Ulta over Estee Lauder because Ulta offers a better risk-to-reward ratio, with a lower P/E ratio and more potential for long-term growth. The presenter believes Ulta's stock could reach $600 in the future and possibly even higher, making it a better investment option compared to Estee Lauder.

What challenges is Estee Lauder currently facing?

Estee Lauder is facing challenges due to a weakening global consumer market, particularly in key regions like China and Japan. This slowdown in consumer spending adds uncertainty to the company's future prospects and impacts its stock performance.

What does the presenter think about Estee Lauder's potential recovery?

The presenter believes that while Estee Lauder could recover to previous highs, the stock is unlikely to rebound quickly, given its high P/E ratio and the ongoing challenges in the consumer market. A quick recovery is not expected, and the stock might continue facing downward pressure.

Why does the presenter believe Ulta could break $600 in the future?

The presenter believes Ulta could break $600 due to its lower P/E ratio, indicating that the stock is undervalued. Given the company's growth potential, strong market positioning, and a favorable risk-to-reward profile, Ulta's stock could continue to climb toward $900 or even $1,000 in the future.