EL Set to Release Q3 Earnings: Key Insights for Investors

The Estee Lauder Companies Inc. EL is likely to register a decline in both top and bottom lines when it reports third-quarter fiscal 2025 earnings on May 1. The Zacks Consensus Estimate for net sales is pegged at $3.5 billion, implying a decrease of 10.9% from the prior-year quarter's level.

The consensus mark for fiscal third-quarter earnings has decreased a penny in the past 30 days to 30 cents per share, indicating a decline of 69.1% from the figure reported in the year-ago quarter. EL delivered a trailing four-quarter earnings surprise of 101.9%, on average. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

The Estee Lauder Companies Inc. Price, Consensus and EPS Surprise

The Estee Lauder Companies Inc. price-consensus-eps-surprise-chart | The Estee Lauder Companies Inc. Quote

Things to Know About EL’s Upcoming Results

The Estee Lauder Companies has been battling a challenging environment marked by weaknesses across China and travel retail. A decline in consumer sentiment in China has been contributing to a slowdown in the prestige beauty sector and lower conversion rates across these markets. 

Due to challenges across its Asia travel retail business, weak consumer sentiment in China and Korea, and ongoing global geopolitical uncertainty, the company expects continued volatility and limited visibility in the near term. For the fiscal third quarter, The Estee Lauder Companies anticipates an organic net sales decline of 8-10% compared with the previous quarter’s level, along with adjusted earnings per share (EPS) decline of 69-79%, ranging from 20 cents to 30 cents. Our model expects a 9.1% organic net sales decline in the to-be-reported quarter.

The Estee Lauder Companies has also been grappling with rising operating expenses. In the fiscal second quarter, operating expenses rose 500 basis points (bps) as a percentage of sales. This increase includes a rise in advertising, promotion and innovation expenses, reflecting investments aimed at boosting performance during holidays and key shopping events, as well as driving consumer engagement for new product launches. The persistence of any of these factors is a concern.

Despite these challenges, The Estee Lauder Companies has been benefiting from its Profit Recovery and Growth Plan, which focuses on three main areas: accelerating margin expansion, fueling growth through targeted investments and simplifying processes to enhance agility. The company’s expanded presence in high-growth digital channels is also a positive factor. In addition, EL is well-positioned in emerging markets, where demand is steadily increasing. The continuation of these factors is likely to have offered some respite in its fiscal third-quarter performance.

Earnings Whispers for EL Stock

Our proven model predicts an earnings beat for The Estee Lauder Companies 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. 

The Estee Lauder Companies carries a Zacks Rank #3 and has an Earnings ESP of +14.31%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

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

Church & Dwight CHD currently has an Earnings ESP of +0.66% 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 quarterly EPS is pegged at 89 cents, which implies a roughly 7.3% decrease year over year. CHD delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. The Zacks Consensus Estimate for Church & Dwight’s first-quarter 2025 revenues is pegged at $1.51 billion, which indicates growth of 0.5% from the figure reported in the prior-year quarter. 

Ollie's Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +1.64% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter fiscal 2025 EPS is pegged at 70 cents, which implies a 4.11% decrease year over year.

The consensus mark for Ollie's Bargain’s quarterly revenues is pegged at $564.2 million, which indicates growth of 10.9% from the figure reported in the prior-year quarter. OLLI delivered a trailing four-quarter earnings surprise of 3.3%, on average.

The J. M. Smucker Company SJM currently has an Earnings ESP of +2.96% and a Zacks Rank of 3. The consensus estimate for J. M. Smucker’s quarterly revenues is pegged at $2.2 billion, which indicates a decline of 0.9% from the figure reported in the prior-year quarter. SJM delivered a trailing four-quarter earnings surprise of 11.7%, on average.

The Zacks Consensus Estimate for J. M. Smucker’s fourth-quarter fiscal 2025 EPS is pegged at $2.25, which implies a 15.4% decrease year over year.

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

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