Shares of cosmetics company Estee Lauder Inc. EL hit a new 52-week high of $89.84 on May 5, as the company reported solid third-quarter fiscal 2015 results and growing optimism around its prestige beauty category.
Strong Third-Quarter Performance
On May 5, Estee Lauder posted robust third-quarter results, wherein both earnings and revenues surpassed the respective Zacks Consensus Estimate. Earnings of 72 cents increased 12% from the prior-year quarter backed by strong top-line growth.
Net sales increased 1% year over year on the back of higher sales in most of the geographic regions and major product categories. (Read: Estee Lauder's Q3 Earnings & Revenues Beat; Ups FY View).
In fact, management raised the fiscal 2015 earnings guidance to reflect the upbeat results as well as the growing optimism around its prestige beauty sector. Estee Lauder has raised the lower end of its earnings per share growth range. Earnings per share, excluding the effect of currency and accelerated retailer orders, are expected to be in the range of 8%-10% compared to a range of 7%-10% expected previously.
Investors are encouraged by the accelerating growth in the prestige beauty sector. Moreover, investors commend Estee Lauder’s best-in-class collection of brands, innovation and product launch line-up for the upcoming year. The booming tourism sector is also expected to boost its travel retail category.
Headquartered in New York, the Zacks Rank #3 (Hold) company manufactures and sells of skin care, makeup, fragrance and hair care products.
Stocks to Consider
A couple of better-ranked stocks in the cosmetics sector are Helen of Troy HELE and Inter Parfums Inc. IPAR. While Helen of Troy sports a Zacks Rank #1 (Strong Buy), Inter Parfums carries a Zacks Rank #2 (Buy). Another stock worth considering in the broader consumer staples sector is SUPERVALU Inc. SVU sporting a Zacks Rank #1.
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