Is Russell Index Rebalancing Altering The Investment Case For Estée Lauder (EL)?

• In late June 2025, The Estée Lauder Companies Inc. was removed from several major Russell growth and large-cap indices and added to the Russell Midcap and value-oriented indices as part of the annual index reconstitution.
• This reshuffling of index inclusion can influence passive investment flows and reshape the investor base, as funds tracking these indices update their holdings.
• We'll consider how the company's move from large-cap growth to midcap and value indices may impact its investment narrative going forward.

Find companies with promising cash flow potential yet trading below their fair value.

Estée Lauder Companies Investment Narrative Recap

To invest in Estée Lauder Companies, you need confidence in its ability to restore profitable growth through operational transformation and expansion in key beauty markets. The company’s shift from large-cap growth to midcap and value indices in late June 2025 does not materially change the biggest short-term catalyst, which remains the progress of its restructuring program, nor does it significantly alter the main risk, which is ongoing sales pressure from weak travel retail and soft demand in China.

The affirmation of the company’s quarterly dividend at US$0.35 per share, most recently in June 2025, stands out against recent earnings declines and index removals. This stable dividend signals management’s intention to reinforce shareholder confidence, even as near-term catalysts and risks continue to play out through cost-saving measures and restructuring efforts.

By contrast, investors should be aware that persistent declines in travel retail sales and ongoing margin pressure may mean that...

Read the full narrative on Estée Lauder Companies (it's free!)

Estée Lauder Companies' projections indicate revenue of $16.1 billion and earnings of $1.4 billion by 2028. This implies a 2.9% annual revenue growth rate and a $2.3 billion increase in earnings from current earnings of -$871.0 million.

Uncover how Estée Lauder Companies' forecasts yield a $70.04 fair value, a 24% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided 7 fair value estimates for Estée Lauder Companies, ranging from US$64.96 to US$121.41 per share. Many cite ongoing restructuring efforts as crucial for the company’s earnings outlook, reflecting a broad spectrum of expectations for future performance.

Explore 7 other fair value estimates on Estée Lauder Companies - why the stock might be worth 29% less than the current price!

Build Your Own Estée Lauder Companies Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Estée Lauder Companies research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Estée Lauder Companies' overall financial health at a glance.

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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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