To The Moon

1. $Estee Lauder(EL)$ Earnings Season & Retailer Divergence: What’s Driving the Stock?

Quarterly Results & Guidance

• EL reported a 12% drop in sales to ~$3.41 billion and a deepening operating loss, prompting a ~5% stock drop.

• Adjusted earnings per share came in at $0.09, meeting expectations but guidance disappointed, projecting $1.90–$2.10 EPS versus ~$2.20 expected, which triggered a further ~7.6% slide.

• The net loss reached $546 million (or $1.51/share), driven by restructuring charges (~$527 million), impairment, and tax adjustments.

• Full-year sales declined 8% to $14.3 billion. Gross margins improved to ~74% thanks to cost-efficiencies and pricing, while net profits were hurt by restructuring.

• Tariff headwinds are expected to shave $100 million off profits in fiscal 2026.

Restructuring & Retailer Impact

• The company has approved 3,200 job cuts (potentially up to 3,800 more), marking its largest-ever reorganization. Total restructuring charges could hit $1.2–$1.6 billion, aiming for $800 million to $1 billion in annual savings.

• Retailers are cutting back on inventory, especially in travel retail, pressured by weakened demand in China and North America.

• Retailers are cutting back on inventory, especially in travel retail, pressured by weakened demand in China and North America.

Takeaway: Earnings beat on a per-share basis but exposed serious underlying weaknesses. Guidance disappointed, especially given ongoing pressure in China, travel retail, and from tariffs prompting restructuring and shaking investor confidence.

2. Is EL "Oversold"? What Do the Technicals Show?

Recent Technical Sentiment

• Multiple models show weak technicals, with bearish indicators such as "bearish engulfing" and oversold/overbought oscillations. EL’s technical score is 4.43/10, despite strong fundamentals (~9.7/10).

• Institutional investors remain cautious, while retail investors show slight optimism.

• No recent RSI has fallen below the 30 threshold to indicate classic oversold conditions.

• Investing.com suggests a neutral technical outlook, with 6 sell signals and 6 buy signals across moving averages, and an RSI around 48 right in the middle. MACD remains in bearish territory.

• GPT‑based technical forecasting recently downgraded EL to a “Sell candidate”, reflecting negative momentum and declining technicals. There’s some possibility of a rebound over a 3‑month horizon, but only if key support levels hold.

Oversold Status Clarified

• Classic oversold RSI territory (<30) hasn't been reached recently; EL is not technically oversold by conventional measures. Nasdaq

Conclusion: Technical indicators remain weak to neutral bearish sentiment dominates, but oversold conditions have not been triggered. A turnaround may require strong catalysts or clear signs of stabilization.

3. Summary Table

Thoughts

• Earnings season reflected deep execution and macro challenges. Guidance missed expectations, especially in key growth areas like China and travel retail.

• Technicals remain under pressure, with no clear reversal and no oversold extreme to signal a bounce.

• Caution remains warranted. Strategists may wait for concrete signs of recovery like improved consumer sentiment or cost-saving results before considering new positions.