What's happening inside Estee Lauder?
What's happening inside $Estee Lauder(EL)$ ?
I don't invest in consumer stocks, but this is an interesting one.
- All measures of profitability are down over the last 5 years.
- Return on capital has plummeted since 2019.
- Margins have weakened as COGS and SG&A have gone up.
- Leverage and cost of debt also up.
Companies selling to other companies enter into long-term contracts, which can mean highly predictable and recurring revenue,
While a fair number are seemingly more expensive than the S&P 500, the potential of these companies to continue growing their FCF at above market rates remains.
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