Things to Note Before Estee Lauder Companies' (EL) Q2 Earnings

The Estee Lauder Companies Inc. EL is likely to register top-and bottom-line decline when it reports second-quarter fiscal 2024 earnings on Feb 5.

The Zacks Consensus Estimate for revenues is pegged at $4.2 billion, suggesting a decrease of 9.3% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has remained unchanged in the past 30 days at 55 cents per share. The projection indicates decline of 64.3% from the figure reported in the year-ago period quarter. The cosmetics giant has a trailing four-quarter earnings surprise of 110.1%, on average.

The Estee Lauder Companies Inc. Price and EPS Surprise

 

The Estee Lauder Companies Inc. Price and EPS Surprise

The Estee Lauder Companies Inc. price-eps-surprise | The Estee Lauder Companies Inc. Quote

 

Things To Note

The Estee Lauder Companies has been bearing the brunt of weakness in the Asia travel retail coupled with slower-than-anticipated recovery in the prestige beauty across mainland China. Another factor dampening the company’s performance is the potential risks of more business disruptions across Israel and other regions of the Middle East. The persistence of these factors is likely to have hurt EL’s performance in the second quarter of fiscal 2024.

Apart from this, The Estee Lauder Companies’ international presence keeps it exposed to unfavorable foreign currency translation risks. We expect a 0.9% headwind from unfavorable currency rates on the top line during the fiscal second quarter.

For the second quarter of fiscal 2024, management anticipates reported net sales decline of 9-11% and organic net sales drop of 8-10%. Our model suggests a quarterly organic net sales decline of 8.2%. The adjusted earnings per share (EPS) on a constant currency basis are likely to have declined by 60-66% in the fiscal second quarter.

Yet, Estee Lauder Companies has a strong presence in emerging markets, which insulates it from the macroeconomic headwinds in the matured markets. Also, the company has been benefiting from strength in online business.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for The Estee Lauder Companies this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Estee Lauder Companies carries a Zacks Rank #3 and has an Earnings ESP of +1.88%.

Other Stocks With Favorable Combination

Here are some other companies worth considering, as our model shows that these have the right elements to beat on earnings this time.

Church & Dwight Co. CHD has an Earnings ESP of +0.90% and a Zacks Rank of 2. The company is slated to witness top- and bottom-line growth when it reports fourth-quarter 2023 results. The Zacks Consensus Estimate for CHD’s quarterly revenues is pegged at $1.5 billion, suggesting growth of 5.3% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Church & Dwight’s quarterly earnings of 64 cents per share suggests an increase of 3.2% from the year-ago quarter’s levels. CHD delivered an earnings surprise of 10.1%, on average, in the trailing four quarters.

Coca-Cola KO has an Earnings ESP of +0.95% and a Zacks Rank of 2. KO is likely to register top- and bottom-line growth when it reports the fourth-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $10.6 billion, suggesting growth of 4.8% from that reported in the prior-year quarter.

The Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has been unchanged in the past 30 days, at 48 cents per share. The consensus estimate for earnings suggests 6.7% growth from the year-ago quarter’s reported number. KO has delivered an earnings beat of 5.1%, on average, in the trailing four quarters.

TreeHouse Foods THS currently has an Earnings ESP of +7.04% and a Zacks Rank #2. THS is likely to record top and bottom-line decline when it reports fourth-quarter 2023 results.

The Zacks Consensus Estimate for revenues is pegged at $926.9 million, indicating a 7% decline from the prior-year quarter’s actual. The consensus mark for earnings is pinned at 71 cents per share, calling for a 27.6% decline from the year-ago quarter’s levels. THS has a trailing four-quarter earnings surprise of 26.5%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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CocaCola Company (The) (KO) : Free Stock Analysis Report

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

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