When Should You Buy The Estée Lauder Companies Inc. (NYSE:EL)?

Let's talk about the popular The Estée Lauder Companies Inc. (NYSE:EL). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$85.48 at one point, and dropping to the lows of US$64.26. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Estée Lauder Companies' current trading price of US$66.95 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Estée Lauder Companies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Is Estée Lauder Companies Still Cheap?

According to our valuation model, Estée Lauder Companies seems to be fairly priced at around 1.1% below our intrinsic value, which means if you buy Estée Lauder Companies today, you’d be paying a fair price for it. And if you believe the company’s true value is $67.69, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Estée Lauder Companies’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

See our latest analysis for Estée Lauder Companies

Can we expect growth from Estée Lauder Companies?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Estée Lauder Companies, it is expected to deliver a relatively unexciting top-line growth of 7.7% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in EL’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on EL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Case in point: We've spotted 2 warning signs for Estée Lauder Companies you should be aware of.

If you are no longer interested in Estée Lauder Companies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.