Exploring Estée Lauder (EL) Valuation After Rothschild & Co Downgrade and Mixed Analyst Signals

Rothschild & Co's recent downgrade of Estée Lauder Companies (EL) from Neutral to Sell has drawn fresh attention to the stock. This negative shift follows a run of mixed analyst actions and adds another layer to ongoing debates over the company’s future direction.

See our latest analysis for Estée Lauder Companies.

Despite a challenging few years for total shareholders, Estée Lauder Companies has seen its share price rebound, climbing 27.2% year-to-date, with a 1-year total shareholder return of 32.7%. Recent moves, such as the minority stake in Xinú and the latest analyst downgrade, have kept momentum in the spotlight. However, long-term performance is still under pressure.

If this mix of recovery and risk has you curious about what else is out there, now is the perfect time to broaden your horizons and discover fast growing stocks with high insider ownership

With shares still trading below analyst price targets but recent downgrades casting doubt on its comeback story, investors now face a crucial question: is Estée Lauder undervalued, or is the market already factoring in future growth?

Most Popular Narrative: 7.7% Undervalued

With Estée Lauder Companies last closing at $94.07 and the most popular narrative putting fair value at $101.87, there is a disconnect worth exploring. This gap could hinge on future growth beyond what the market sees right now.

Significant investment is being allocated to product innovation across prestige price tiers, with a focus on clinically-backed and trend-driven skincare, makeup, and luxury fragrance launches. Innovation is targeted to exceed 25% of sales in fiscal '26, and faster time-to-market is being emphasized, which is likely to enhance premium pricing power, brand equity, and gross margins.

Read the complete narrative.

Is a wave of new products what sets this fair value apart from the market? Even more interesting, the analysis hints at a major profit transformation that echoes strategies usually reserved for top-tier disruptors. Want to unravel the bold assumptions driving this premium expectation? You’ll need to see the full narrative for the real story.

Result: Fair Value of $101.87 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering uncertainty in travel retail and rising competition from direct-to-consumer brands could quickly disrupt Estée Lauder’s path to recovery.

Find out about the key risks to this Estée Lauder Companies narrative.

Another View: Challenging the Undervaluation

While fair value models suggest Estée Lauder is undervalued, a look at its price-to-sales ratio tells a different story. The stock currently trades at 2.3 times sales, compared to a peer average of 1.5 and a fair ratio of 2.2. This premium could limit upside if the market revisits sector norms or adjusts for growth risks. Are investors comfortable with this level of optimism, or is caution the smarter move?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Estée Lauder Companies Narrative

If you want to dig deeper or believe there’s more to the story, you’re empowered to create your own view from the data in just minutes. Do it your way

A great starting point for your Estée Lauder Companies research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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