The Estee Lauder Companies (EL) online sales bode well

Strong e-commerce business and skincare sales are driving Estee Lauder Companies Inc. EL. The presence of the leading supplier of skin care, makeup, fragrance and hair care products in emerging markets bodes well.

Let’s go deeper.

Image source: Zacks Investment Research

What drives business?

The Estee Lauder Companies has a strong e-commerce business, which is expected to be a major growth engine in the years to come. The company has implemented new digital technologies and experiences, including online booking for every in-store appointment, omnichannel loyalty programs and highly tactile mobile services. These initiatives and the company’s digital mindset support the company’s online sales. The company expanded its omnichannel capabilities to provide consumers with flexible and convenient shopping options in the second quarter of fiscal 2022. The company’s global online channel delivered strong performance, with organic sales growing at a figure during the second quarter of the fiscal year.

The company’s skincare portfolio Zacks Rank #3 (Hold) has been doing well for some time. During the second fiscal quarter, sales in the Skincare category increased 12% year-over-year to $3,159 million. Skin Care net sales increased in all regions driven by strong double-digit sales growth at La Mer and Clinique. In May 2021, The Estee Lauder Companies expanded its Skin Care business by completing the first phase of increasing its stake in DECIEM Beauty Group Inc. (“DECIEM”). The Estee Lauder Companies now holds nearly 76% of DECIEM’s capital, compared to 29% previously. Additionally, management agreed to purchase the remaining stake after three years.

The Estee Lauder Companies has a strong presence in emerging markets, insulating it from the macroeconomic headwinds of mature markets. The company derives significant revenue from emerging markets, which encourages it to make distribution, digital and marketing investments in these markets. In the second quarter of fiscal 2022, sales increased 7% to $1,902 million in the Asia Pacific region. Organic net sales increased 5% in the Asia-Pacific region. Most markets in the region grew, led by mainland China and Australia. The Estee Lauder Companies is investing to meet consumer demand in China and Asia.

Is everything rosy for Estée Lauder companies?

While most physical retail stores that sell The Estee Lauder Companies products (operated by the company and customers) remained operational for much of the second quarter of fiscal 2022, there were some closures. intermittent in the rest of the world. In locations where stores were operational, consumer traffic was below pre-pandemic levels globally. The company said international passenger traffic remained limited worldwide.

Apart from this, the company has faced adverse effects resulting from pandemic-induced transportation and production delays due to port congestion, labor and container shortages, and shipping delays. shipping, among other reasons. These high costs are likely to affect cost of sales and operating expenses for the remainder of fiscal 2022. That said, management is on track to counter these headwinds via strategic pricing, product mix, timing of shipments and use of air freight, among other efforts. EL stock has lost 10.9% over the past year, compared to a 32.2% drop in the industry.

Solid basic bets

Some higher ranked stocks are Inter Parfums, Inc. IPAR, Flowers Food BLF and McCormick & Company MKC.

Inter Parfums develops, manufactures and distributes prestigious perfumes and cosmetics. He currently wears a Zacks Rank #2 (Buy). Inter Parfums has a surprise on the profits of the last four quarters of 46.7%, on average. You can see the full list of today’s Zacks #1 Rank stocks here.

Zacks consensus estimate for current year sales and earnings per share (EPS) from IPAR suggests growth of 12.5% ​​and 10.9%, respectively, over period figures of the previous year.

Flowers Foods, the producer and distributor of packaged baked goods, currently carries a Zacks Rank #2. FLO has a four-quarter earnings surprise of 9%, on average.

Zacks’ consensus estimate for Flowers Foods’ current-year sales and EPS suggests growth of 7.2% and 4%, respectively, from the figure reported a year ago.

McCormick is a leading manufacturer, marketer and marketer of spices, seasonings, specialty foods and flavors. It currently carries a Zacks rank of No. 2. MKC has a trailing four-quarter earnings surprise of 7.3%, on average

Zacks’ consensus estimate for McCormick’s current-year sales and EPS suggests growth of 5% and 3.9%, respectively, from numbers reported a year ago.

5 shares ready to double

Each was handpicked by a Zacks expert as the #1 preferred stock to earn +100% or more in 2021. Previous recommendations have skyrocketed +143.0%, +175.9%, + 498.3% and +673.0%.

Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.

Today, check out these 5 potential home runs >>

Click to get this free report

The Estee Lauder Companies Inc. (EL): Free Stock Analysis Report

McCormick & Company, Incorporated (MKC): Free Stock Analysis Report

Flowers Foods, Inc. (FLO): Free Inventory Analysis Report

Inter Parfums, Inc. (IPAR): Free Inventory Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


Source link

David A. Albanese