Estée Lauder Faces Tough Earnings Ahead of Q2 Release

Estée Lauder is poised for a challenging Q2 report, with EPS expected to drop significantly. Analysts maintain a 'Hold' rating amid concerns over declining sales and future growth.

Date: 14-01-2025

AI Rating: 4

Estée Lauder's EPS Outlook
According to the report, Estée Lauder is projected to report an EPS of $0.32 for Q2, a significant decrease of 63.6% compared to $0.88 a year earlier. This decline highlights potential challenges the company is facing, particularly in the context of market performance.

Past Performance and Estimates
In the most recent quarter, Estée Lauder reported an adjusted EPS of $0.14, which was 55.6% below consensus estimates. Despite having surpassed EPS estimates in prior quarters, the sharp decline in expected EPS for fiscal year 2025 (anticipated at $1.48, down 42.9% from $2.59 in fiscal 2024) raises red flags for investors regarding the company's profitability moving forward.

Revenue Growth and Market Performance
The report indicates that Estée Lauder's Q1 net sales of $3.36 billion fell 4% year-over-year. Furthermore, the company expects a decline in reported and organic net sales of 6% to 8% year-over-year for Q2 2025. This suggests potential struggles to maintain growth in revenue, crucial for investor confidence.

Stock Performance Analysis
Estée Lauder shares have suffered a steep decline of 45.9% over the past year, underperforming the S&P 500 Index, which saw a gain of 21.8%. Following the disappointing Q1 results announcement, shares dropped 20.9%, indicating a heightened sensitivity to poor performance news.

Analyst Ratings and Expectations
The consensus rating remains cautious with a ``Hold`` from analysts. With four analysts suggesting ``Strong Buys`` and 23 opting for ``Holds``, the market seems divided on Estée Lauder’s future prospects. While the average price target of $81.56 suggests an 11% potential upside, the uncertainties illustrated in the report could overshadow investor sentiment.

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