EL Stock to Post Q4 Earnings: Here's What Investors Should Know

Things to Consider About Estee Lauder’s Upcoming Results

The Estee Lauder Companies’ fiscal fourth-quarter results are likely to benefit from continued momentum in fragrance, strength in key international markets and improving retail trends. The company has been gaining prestige beauty share in Mainland China, Japan, Korea and the United States, while priority emerging markets have been delivering strong growth. These trends, alongside expanded consumer reach, successful brand activations and innovation, are likely to have supported sales during the quarter.

On a category basis, fragrance has remained a key growth engine and is likely to have maintained its momentum, supported by luxury brands, product innovation and broader distribution. Makeup trends have been improving, with its rate of decline moderating and several brands gaining share in key markets. Recent launches across La Mer, M·A·C, TOM FORD, KILIAN PARIS and BALMAIN Beauty are likely to have supported category performance in the fiscal fourth quarter.

Omnichannel expansion and digital capabilities are likely to have provided additional support. The company has expanded its presence on Amazon and TikTok Shop, strengthened specialty-multi distribution through M·A·C’s Sephora launch and advanced its Shopify-powered direct-to-consumer infrastructure. Continued online growth, together with progress in CRM, consumer care and technology infrastructure, indicates that broader digital reach and more connected consumer engagement are supporting the business.

However, macroeconomic and operating pressures might have limited the upside. Business disruptions related to the Middle East conflict are expected to reduce fourth-quarter sales growth about 2 percentage points and EPS by 6 cents. Tariffs, inflation and a greater year-over-year impact from normalized employee incentive costs also remained profitability headwinds, although PRGP savings, lower excess and obsolescence and other operational-efficiency initiatives have been helping mitigate some of these pressures.

Earnings Whispers for EL Stock

Our proven model conclusively predicts an earnings beat for Estee Lauder this time. 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, which is exactly the case here.

Estee Lauder carries a Zacks Rank #3 and has an Earnings ESP of +6.32%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

More Stocks With the Favorable Combination

Here are a few other companies worth considering, as our model shows that these, too, have the right combination of elements to beat on earnings this reporting cycle.

BJ's Wholesale Club Holdings, Inc. BJ currently has an Earnings ESP of +0.39% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BJ's Wholesale Club’s upcoming quarter’s EPS is pegged at $1.16, which implies 1.8% growth year over year. The consensus estimate for the quarterly revenues is pinned at $5.89 billion, which indicates 9.5% growth from the figure reported in the prior-year quarter. BJ delivered a trailing four-quarter earnings surprise of 4.5%, on average.

General Mills, Inc. GIS currently has an Earnings ESP of +0.54% and a Zacks Rank of 3. The consensus mark for the upcoming quarter’s revenues is pegged at $4.31 billion, which indicates a decrease of 4.5% from the figure reported in the year-ago quarter. 

The Zacks Consensus Estimate for General Mills’ quarterly earnings per share of 73 cents implies a decline of 15.1% from the figure reported in the year-ago quarter. GIS delivered a trailing four-quarter earnings surprise of 4.1%, on average.

Ulta Beauty, Inc. ULTA currently has an Earnings ESP of +1.20% and a Zacks Rank of 3. The consensus estimate for the quarterly revenues is pegged at $2.97 billion, which indicates a surge of 6.5% from the figure reported in the prior-year quarter. 

The Zacks Consensus Estimate for Ulta Beauty’s upcoming quarter’s EPS is pegged at $6.17, which implies a 6.8% increase year over year. ULTA delivered a trailing four-quarter earnings surprise of roughly 10%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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