Estee Lauder (EL) Reliance on International Sales: What Investors Need to Know

Have you assessed how the international operations of Estee Lauder (EL) performed in the quarter ended March 2024? For this beauty products company, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

In the current global economy, which is more interconnected than ever, a company's success in penetrating international markets is crucial for its financial health and growth journey. Investors must understand a company's dependence on overseas markets, as this offers a window into the company's earnings stability, its ability to benefit from varied economic cycles and its potential for long-term growth.

Participation in global economies acts as a defense against economic difficulties at home and a pathway to more rapidly developing economies. However, it also comes with the complexities of dealing with fluctuating currencies, geopolitical risks and different market dynamics.

Our review of EL's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The company's total revenue for the quarter amounted to $3.94 billion, showing rise of 5%. We will now explore the breakdown of EL's overseas revenue to assess the impact of its international operations.

A Closer Look at EL's Revenue Streams Abroad

During the quarter, Europe the Middle East & Africa contributed $1.65 billion in revenue, making up 41.8% of the total revenue. When compared to the consensus estimate of $1.57 billion, this meant a surprise of +4.9%. Looking back, Europe the Middle East & Africa contributed $1.59 billion, or 37.1%, in the previous quarter, and $1.47 billion, or 39.3%, in the same quarter of the previous year.

Asia/Pacific accounted for 29.9% of the company's total revenue during the quarter, translating to $1.18 billion. Revenues from this region represented a surprise of -4.93%, with Wall Street analysts collectively expecting $1.24 billion. When compared to the preceding quarter and the same quarter in the previous year, Asia/Pacific contributed $1.45 billion (33.9%) and $1.19 billion (31.8%) to the total revenue, respectively.

Anticipated Revenues in Overseas Markets

The current fiscal quarter's total revenue for Estee Lauder, as projected by Wall Street analysts, is expected to reach $3.88 billion, reflecting an increase of 7.4% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: Europe the Middle East & Africa is anticipated to contribute 39.9% or $1.55 billion and Asia/Pacific 36.5% or $1.41 billion.

For the full year, a total revenue of $15.74 billion is expected for the company, reflecting a decline of 1.1% from the year before. The revenues from Europe the Middle East & Africa and Asia/Pacific are expected to make up 37.9% and 32.8% of this total, corresponding to $5.96 billion and $5.16 billion respectively.

Key Takeaways

Estee Lauder's reliance on international markets for revenues offers both opportunities and risks. Hence, keeping an eye on its international revenue trends could significantly help forecast the company's prospects.

With the increasing intricacies of global interdependence and geopolitical strife, Wall Street analysts meticulously observe these patterns, especially for companies with an international footprint, to tweak their forecasts of earnings. Importantly, several additional factors, such as a company's domestic market status, also impact these earnings forecasts.

At Zacks, a company's changing earnings outlook is given considerable attention due to its proven, strong influence on a stock's price performance in the near term. The connection here is straightforward and positive: when earnings estimates are revised upward, the stock price generally follows suit, increasing as well.

With an impressive externally audited track record, our proprietary stock rating tool - the Zacks Rank - harnesses the power of earnings estimate revisions and serves as an effective indicator of a stock's near-term price performance.

At present, Estee Lauder holds a Zacks Rank #3 (Hold). This ranking implies that its near-term performance might mirror the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Examining the Latest Trends in Estee Lauder's Stock Value

The stock has declined by 8% over the past month compared to the 1.6% fall of the Zacks S&P 500 composite. Meanwhile, the Zacks Consumer Staples sector, which includes Estee Lauder, has increased 1.5% during this time frame. Over the past three months, the company's shares have experienced a loss of 7.3% relative to the S&P 500's 3.8% increase. Throughout this period, the sector overall has witnessed a 0.9% increase.

Only $1 to See All Zacks' Buys and Sells

We're not kidding.

Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.

Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.

See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.