Estée Lauder (EL)

Key Statistics

EV/EBIT = 30.70x

ROE = 37.71%

Debt/Equity = 136%

FCF Yield = 1.67%

Dividend Yield = 1.1%

Market Capitalization = $85.83 billion

The Company

Estée Lauder (EL) is a beauty company headquartered in New York City.

Its origins trace back to 1946 when Estée founded the company selling skin lotion. Her signature product was the ‘super rich all-purpose cream,’ and she sold it to beauty shops, beach clubs, and resorts.

Another critical product was ‘youth dew,’ a bath oil with an appealing scent.

Estée built the empire one step at a time and was the consummate saleswoman.

“I have never worked a day in my life without selling. If I believe in something, I sell it, and I sell it hard.” - Estée Lauder

Today, EL is one of the world’s leading sellers of skin care, fragrance, and hair care products. It is a massive, global firm operating in 150 countries.

EL is the 2nd biggest player in the cosmetics market behind only L’Oreal. Other competitors include Unilever, Procter & Gamble, Louis Vuitton, Nature, and Chanel.

Skin Care represents 56% of total sales, which is fitting as it is the original segment that launched the company in the 1940s. Makeup represents 26% of sales. Fragrances are 12% of sales. 4% of sales are hair care products.

EL has many valuable brands including: Estée Lauder itself (skincare & makeup), MAC cosmetics (the top makeup brand in the world), Aveda (hair products), Le Labo (fragrances), aramis (men’s fragrance, grooming, and skin care products), Clinique (skincare, cosmetics, fragrances), Bobbi Brown (makeup & skin care), La Mer (luxury skin care), Aveda (primarily hair care but also skin care, makeup, and fragrance), Bumble and bumble (hair care and styling), Darphin (Paris-based skin care), Tom Ford (fragrances & beauty products - a licensed deal that began in 2005), smashbox (LA-based studio-inspired makeup), Glamglow (makeup), and Jo Malone London (fragrance).

The Tom Ford brand is noteworthy. In 2005, EL entered a licensing deal with the Tom Ford brand. This year, EL bought the company in its entirety for $2.8 billion. This is a wise acquisition for EL as Tom Ford’s brand has helped fueled growth for the company.