Intrinsic value of Estee Lauder Cl A - EL

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$96.99

  Intrinsic Value

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  Value-price divergence*

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of EL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 35.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.47
  2.70
  2.93
  3.14
  3.32
  3.49
  3.64
  3.78
  3.90
  4.01
  4.11
  4.20
  4.28
  4.35
  4.42
  4.47
  4.53
  4.57
  4.62
  4.65
  4.69
  4.72
  4.75
  4.77
  4.80
  4.82
  4.83
  4.85
  4.87
  4.88
  4.89
Revenue, $m
  11,262
  11,566
  11,905
  12,278
  12,686
  13,129
  13,608
  14,122
  14,672
  15,261
  15,888
  16,555
  17,263
  18,014
  18,809
  19,651
  20,540
  21,480
  22,471
  23,517
  24,620
  25,782
  27,007
  28,296
  29,653
  31,081
  32,584
  34,165
  35,827
  37,575
  39,413
Variable operating expenses, $m
 
  9,839
  10,124
  10,438
  10,781
  11,153
  11,554
  11,986
  12,449
  12,943
  13,470
  13,907
  14,502
  15,133
  15,802
  16,509
  17,256
  18,045
  18,878
  19,757
  20,683
  21,660
  22,688
  23,771
  24,911
  26,111
  27,373
  28,701
  30,098
  31,567
  33,111
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,652
  9,839
  10,124
  10,438
  10,781
  11,153
  11,554
  11,986
  12,449
  12,943
  13,470
  13,907
  14,502
  15,133
  15,802
  16,509
  17,256
  18,045
  18,878
  19,757
  20,683
  21,660
  22,688
  23,771
  24,911
  26,111
  27,373
  28,701
  30,098
  31,567
  33,111
Operating income, $m
  1,610
  1,727
  1,781
  1,841
  1,906
  1,977
  2,053
  2,135
  2,223
  2,317
  2,418
  2,647
  2,760
  2,880
  3,008
  3,142
  3,284
  3,435
  3,593
  3,761
  3,937
  4,123
  4,318
  4,525
  4,742
  4,970
  5,210
  5,463
  5,729
  6,008
  6,302
EBITDA, $m
  2,025
  2,109
  2,171
  2,239
  2,313
  2,394
  2,481
  2,575
  2,675
  2,783
  2,897
  3,019
  3,148
  3,285
  3,430
  3,583
  3,745
  3,917
  4,097
  4,288
  4,489
  4,701
  4,924
  5,159
  5,407
  5,667
  5,941
  6,229
  6,533
  6,851
  7,186
Interest expense (income), $m
  79
  78
  84
  91
  98
  106
  114
  124
  134
  144
  156
  168
  181
  194
  209
  224
  241
  258
  276
  295
  315
  337
  359
  383
  408
  434
  462
  491
  522
  554
  588
Earnings before tax, $m
  1,555
  1,648
  1,697
  1,750
  1,808
  1,871
  1,939
  2,012
  2,090
  2,173
  2,262
  2,479
  2,580
  2,686
  2,799
  2,918
  3,044
  3,177
  3,317
  3,465
  3,621
  3,786
  3,959
  4,142
  4,334
  4,536
  4,748
  4,972
  5,207
  5,455
  5,715
Tax expense, $m
  434
  445
  458
  472
  488
  505
  523
  543
  564
  587
  611
  669
  697
  725
  756
  788
  822
  858
  896
  936
  978
  1,022
  1,069
  1,118
  1,170
  1,225
  1,282
  1,342
  1,406
  1,473
  1,543
Net income, $m
  1,115
  1,203
  1,239
  1,277
  1,320
  1,366
  1,415
  1,469
  1,526
  1,586
  1,651
  1,810
  1,883
  1,961
  2,043
  2,130
  2,222
  2,319
  2,422
  2,530
  2,644
  2,764
  2,890
  3,023
  3,164
  3,311
  3,466
  3,630
  3,801
  3,982
  4,172

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,383
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,223
  8,054
  8,290
  8,550
  8,835
  9,143
  9,476
  9,834
  10,217
  10,627
  11,064
  11,528
  12,022
  12,544
  13,098
  13,684
  14,304
  14,958
  15,649
  16,377
  17,145
  17,954
  18,807
  19,705
  20,650
  21,644
  22,691
  23,791
  24,949
  26,167
  27,447
Adjusted assets (=assets-cash), $m
  7,840
  8,054
  8,290
  8,550
  8,835
  9,143
  9,476
  9,834
  10,217
  10,627
  11,064
  11,528
  12,022
  12,544
  13,098
  13,684
  14,304
  14,958
  15,649
  16,377
  17,145
  17,954
  18,807
  19,705
  20,650
  21,644
  22,691
  23,791
  24,949
  26,167
  27,447
Revenue / Adjusted assets
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
  1.436
Average production assets, $m
  1,873
  1,920
  1,976
  2,038
  2,106
  2,179
  2,259
  2,344
  2,436
  2,533
  2,637
  2,748
  2,866
  2,990
  3,122
  3,262
  3,410
  3,566
  3,730
  3,904
  4,087
  4,280
  4,483
  4,697
  4,922
  5,159
  5,409
  5,671
  5,947
  6,237
  6,543
Working capital, $m
  1,544
  509
  524
  540
  558
  578
  599
  621
  646
  671
  699
  728
  760
  793
  828
  865
  904
  945
  989
  1,035
  1,083
  1,134
  1,188
  1,245
  1,305
  1,368
  1,434
  1,503
  1,576
  1,653
  1,734
Total debt, $m
  2,242
  2,052
  2,212
  2,388
  2,581
  2,790
  3,016
  3,258
  3,518
  3,796
  4,092
  4,407
  4,742
  5,096
  5,472
  5,869
  6,289
  6,733
  7,201
  7,695
  8,215
  8,764
  9,342
  9,951
  10,591
  11,266
  11,975
  12,722
  13,507
  14,332
  15,200
Total liabilities, $m
  5,651
  5,461
  5,621
  5,797
  5,990
  6,199
  6,425
  6,667
  6,927
  7,205
  7,501
  7,816
  8,151
  8,505
  8,881
  9,278
  9,698
  10,142
  10,610
  11,104
  11,624
  12,173
  12,751
  13,360
  14,000
  14,675
  15,384
  16,131
  16,916
  17,741
  18,609
Total equity, $m
  3,572
  2,594
  2,669
  2,753
  2,845
  2,944
  3,051
  3,167
  3,290
  3,422
  3,563
  3,712
  3,871
  4,039
  4,218
  4,406
  4,606
  4,816
  5,039
  5,273
  5,521
  5,781
  6,056
  6,345
  6,649
  6,969
  7,306
  7,661
  8,034
  8,426
  8,838
Total liabilities and equity, $m
  9,223
  8,055
  8,290
  8,550
  8,835
  9,143
  9,476
  9,834
  10,217
  10,627
  11,064
  11,528
  12,022
  12,544
  13,099
  13,684
  14,304
  14,958
  15,649
  16,377
  17,145
  17,954
  18,807
  19,705
  20,649
  21,644
  22,690
  23,792
  24,950
  26,167
  27,447
Debt-to-equity ratio
  0.628
  0.790
  0.830
  0.870
  0.910
  0.950
  0.990
  1.030
  1.070
  1.110
  1.150
  1.190
  1.220
  1.260
  1.300
  1.330
  1.370
  1.400
  1.430
  1.460
  1.490
  1.520
  1.540
  1.570
  1.590
  1.620
  1.640
  1.660
  1.680
  1.700
  1.720
Adjusted equity ratio
  0.279
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322
  0.322

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,115
  1,203
  1,239
  1,277
  1,320
  1,366
  1,415
  1,469
  1,526
  1,586
  1,651
  1,810
  1,883
  1,961
  2,043
  2,130
  2,222
  2,319
  2,422
  2,530
  2,644
  2,764
  2,890
  3,023
  3,164
  3,311
  3,466
  3,630
  3,801
  3,982
  4,172
Depreciation, amort., depletion, $m
  415
  382
  390
  398
  407
  417
  428
  440
  452
  465
  479
  371
  387
  404
  422
  441
  461
  482
  504
  528
  552
  578
  606
  635
  665
  697
  731
  766
  804
  843
  884
Funds from operations, $m
  2,014
  1,586
  1,628
  1,676
  1,727
  1,783
  1,843
  1,908
  1,977
  2,052
  2,131
  2,181
  2,270
  2,365
  2,465
  2,571
  2,683
  2,801
  2,926
  3,057
  3,196
  3,342
  3,496
  3,658
  3,829
  4,008
  4,197
  4,396
  4,605
  4,825
  5,056
Change in working capital, $m
  225
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
Cash from operations, $m
  1,789
  1,627
  1,614
  1,659
  1,709
  1,764
  1,822
  1,885
  1,953
  2,026
  2,103
  2,152
  2,239
  2,332
  2,430
  2,534
  2,644
  2,760
  2,882
  3,011
  3,147
  3,291
  3,442
  3,601
  3,769
  3,945
  4,131
  4,326
  4,532
  4,748
  4,975
Maintenance CAPEX, $m
  0
  -253
  -259
  -267
  -275
  -285
  -295
  -305
  -317
  -329
  -342
  -356
  -371
  -387
  -404
  -422
  -441
  -461
  -482
  -504
  -528
  -552
  -578
  -606
  -635
  -665
  -697
  -731
  -766
  -804
  -843
New CAPEX, $m
  -525
  -47
  -56
  -62
  -68
  -74
  -79
  -85
  -91
  -98
  -104
  -111
  -118
  -125
  -132
  -140
  -148
  -156
  -165
  -174
  -183
  -193
  -203
  -214
  -225
  -237
  -249
  -262
  -276
  -290
  -305
Cash from investing activities, $m
  -1,269
  -300
  -315
  -329
  -343
  -359
  -374
  -390
  -408
  -427
  -446
  -467
  -489
  -512
  -536
  -562
  -589
  -617
  -647
  -678
  -711
  -745
  -781
  -820
  -860
  -902
  -946
  -993
  -1,042
  -1,094
  -1,148
Free cash flow, $m
  520
  1,327
  1,298
  1,330
  1,366
  1,405
  1,448
  1,495
  1,545
  1,599
  1,656
  1,685
  1,750
  1,820
  1,894
  1,972
  2,055
  2,143
  2,236
  2,333
  2,437
  2,546
  2,661
  2,782
  2,909
  3,043
  3,184
  3,333
  3,489
  3,654
  3,827
Issuance/(repayment) of debt, $m
  608
  142
  160
  176
  193
  209
  226
  243
  260
  278
  296
  315
  334
  355
  376
  397
  420
  444
  468
  494
  521
  549
  578
  609
  641
  674
  710
  746
  785
  825
  868
Issuance/(repurchase) of shares, $m
  -890
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -182
  142
  160
  176
  193
  209
  226
  243
  260
  278
  296
  315
  334
  355
  376
  397
  420
  444
  468
  494
  521
  549
  578
  609
  641
  674
  710
  746
  785
  825
  868
Total cash flow (excl. dividends), $m
  316
  1,469
  1,458
  1,506
  1,559
  1,615
  1,674
  1,738
  1,805
  1,877
  1,953
  2,000
  2,085
  2,175
  2,269
  2,370
  2,475
  2,586
  2,704
  2,827
  2,957
  3,094
  3,239
  3,390
  3,550
  3,718
  3,894
  4,079
  4,274
  4,479
  4,695
Retained Cash Flow (-), $m
  71
  -73
  -76
  -84
  -91
  -99
  -107
  -115
  -123
  -132
  -141
  -150
  -159
  -168
  -178
  -189
  -199
  -211
  -222
  -235
  -247
  -261
  -275
  -289
  -304
  -320
  -337
  -354
  -373
  -392
  -412
Prev. year cash balance distribution, $m
 
  1,051
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,447
  1,382
  1,423
  1,467
  1,515
  1,567
  1,622
  1,682
  1,745
  1,812
  1,850
  1,926
  2,006
  2,091
  2,181
  2,276
  2,376
  2,481
  2,593
  2,710
  2,834
  2,964
  3,101
  3,245
  3,397
  3,557
  3,725
  3,902
  4,087
  4,283
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,347
  1,265
  1,238
  1,208
  1,174
  1,137
  1,096
  1,051
  1,002
  950
  879
  822
  763
  702
  640
  578
  517
  457
  399
  344
  293
  246
  203
  165
  132
  104
  80
  60
  45
  32
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Estée Lauder Companies Inc. manufactures and markets skin care, makeup, fragrance, and hair care products worldwide. The company offers a range of skin care products, such as moisturizers, serums, cleansers, toners, body care, exfoliators, acne and oil correctors, facial masks, cleansing devices, and sun care products; and makeup products for face, eyes, lips, and nails, as well as related items, including compacts, brushes, and other makeup tools. It also provides fragrance products in various forms comprising eau de parfum sprays and colognes, lotions, powders, creams, candles, and soaps; and hair care products, which include shampoos, conditioners, styling products, treatment, finishing sprays, and hair color products, as well as sells ancillary products and services. The company offers its products under the brands of Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, Smashbox, RODIN olio lusso, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, By Kilian, Prescriptives, GoodSkin Labs, Ojon, and Osiao. In addition, it operates as a licensee for fragrances and/or cosmetics sold under the Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors, Tom Ford, Ermenegildo Zegna, Tory Burch, Dr. Andrew Weil, and AERIN brand names. The company sells its products through department stores, specialty multi-brand retailers, upscale perfumeries, pharmacies, and salons and spas; freestanding stores; e-commerce Websites; stores in airports and on cruise ships; in-flight and duty-free shops; and self-select outlets. The Estée Lauder Companies Inc. was founded in 1946 and is based in New York, New York.

FINANCIAL RATIOS  of  Estee Lauder Cl A (EL)

Valuation Ratios
P/E Ratio 32
Price to Sales 3.2
Price to Book 10
Price to Tangible Book
Price to Cash Flow 19.9
Price to Free Cash Flow 28.2
Growth Rates
Sales Growth Rate 4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11%
Cap. Spend. - 3 Yr. Gr. Rate 2.6%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 53.5%
Total Debt to Equity 62.8%
Interest Coverage 21
Management Effectiveness
Return On Assets 13.4%
Ret/ On Assets - 3 Yr. Avg. 14.7%
Return On Total Capital 20.1%
Ret/ On T. Cap. - 3 Yr. Avg. 21.8%
Return On Equity 30.9%
Return On Equity - 3 Yr. Avg. 31.2%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 80.6%
Gross Margin - 3 Yr. Avg. 80.5%
EBITDA Margin 18.2%
EBITDA Margin - 3 Yr. Avg. 19.1%
Operating Margin 14.3%
Oper. Margin - 3 Yr. Avg. 15.3%
Pre-Tax Margin 13.8%
Pre-Tax Margin - 3 Yr. Avg. 14.8%
Net Profit Margin 9.9%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 27.9%
Eff/ Tax Rate - 3 Yr. Avg. 30%
Payout Ratio 37.9%

EL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EL stock intrinsic value calculation we used $11262 million for the last fiscal year's total revenue generated by Estee Lauder Cl A. The default revenue input number comes from 2016 income statement of Estee Lauder Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our EL stock valuation model: a) initial revenue growth rate of 2.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for EL is calculated based on our internal credit rating of Estee Lauder Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Estee Lauder Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of EL stock the variable cost ratio is equal to 85.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for EL stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.1% for Estee Lauder Cl A.

Corporate tax rate of 27% is the nominal tax rate for Estee Lauder Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the EL stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for EL are equal to 16.6%.

Life of production assets of 7.4 years is the average useful life of capital assets used in Estee Lauder Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for EL is equal to 4.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3572 million for Estee Lauder Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 365.854 million for Estee Lauder Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Estee Lauder Cl A at the current share price and the inputted number of shares is $35.5 billion.


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COMPANY NEWS

▶ Estee Lauder Still In Buy Zone; Earns IBD Rating Upgrade   [12:28PM  Investor's Business Daily]
▶ Bloggers Spur Estee Lauder's Sales in China   [May-31-17 11:10PM  Bloomberg Video]
▶ Bet on beauty stocks?   [May-26-17 05:21PM  CNBC Videos]
▶ Why Ulta Beauty Shares Fell Out Of Buy Range Ahead Of Earnings   [May-24-17 04:17PM  Investor's Business Daily]
▶ The 3 Best Dividend Stocks in Beauty Products   [May-20-17 10:00AM  Motley Fool]
▶ Beauty Companies Eye Millennial Customer Base   [May-10-17 05:11PM  Investopedia]
▶ Consumer Stocks That Have Weathered the Storm   [May-08-17 11:55AM  Investopedia]
▶ How Estee Lauder Lured in Millennials   [May-04-17 10:39AM  Investopedia]
▶ Ulta Beauty Shares Break Out As Estee Lauder Pops On Earnings   [04:26PM  Investor's Business Daily]
▶ Cramer's Stop Trading: Estee Lauder   [09:55AM  CNBC Videos]
▶ Estee Lauder tops Street 3Q forecasts   [06:54AM  Associated Press]
▶ Piper Jaffray Starts Coverage on Beauty Companies   [May-01-17 11:04PM  Investopedia]
▶ Top 4 Cosmetics Stocks of 2017   [Apr-13-17 11:44AM  Investopedia]
▶ 11 Most Expensive Makeup Brands in the World   [Apr-06-17 09:30AM  Insider Monkey]
▶ Estee Lauder Stock Rated 'Buy' at Goldman   [Apr-04-17 11:53AM  TheStreet.com]
▶ The 3 Best Beauty Product Companies to Buy in 2017   [Apr-01-17 08:17AM  Motley Fool]
▶ A Hard Day's Night   [06:55PM  GuruFocus.com]
▶ How this beauty stock could climb to $100   [04:29PM  CNBC Videos]
▶ 15 Most Expensive Mens Suits Brands in the World   [Mar-24-17 06:23PM  at Insider Monkey]
▶ Behind Ultas Sales Boost Strategy in Fiscal 2017   [Mar-15-17 10:37AM  Market Realist]
Stock chart of EL Financial statements of EL Annual reports of EL
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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