Should You Buy, Sell or Hold Estee Lauder Stock Post Q4 Earnings?

The Estee Lauder Companies Inc. EL delivered impressive fourth-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate and increasing year over year. The beauty giant ended fiscal 2026 with accelerating organic sales growth, significant margin improvement and broad-based gains across geographic regions. The company also entered fiscal 2027 with continued momentum across key categories, markets and growth initiatives.

Shares of Estee Lauder have gained 12.7% in the past three months compared with the industry’s growth of 16.1%.

Image Source: Zacks Investment Research

Taking a Quick Look at Estee Lauder's Q4 Results

Adjusted earnings of 39 cents per share beat the Zacks Consensus Estimate of 32 cents in the fiscal fourth quarter. The bottom line increased from 9 cents in the year-ago quarter.

The company's quarterly net sales of $3,627 million beat the Zacks Consensus Estimate of $3,551 million. The top line increased 6% year over year. Organic net sales increased 5% to reach $3,590 million.

Skin Care sales increased 9% year over year to $1,853 million, with organic sales up 7%. Fragrance sales rose 10% to $618 million, with organic sales also up 10%. Makeup sales increased 3% to $1,010 million, while organic sales rose 2%. Hair Care sales slipped 1% to $140 million, with the same decline organically. Other sales fell 5% to $19 million. Among the four core categories, Skin Care, Makeup and Fragrance grew, while Hair Care declined.

The Americas generated net sales of $995 million, up 6% on a reported basis and 5% organically. Asia/Pacific net sales climbed 7% to $970 million and rose 9% organically. Mainland China sales advanced 12% to $824 million, with organic growth of 7%. EUKEM sales increased 3% to $851 million and rose 1% organically. 

Adjusted gross profit increased 12% year over year to $2,750 million. Adjusted gross margin reached 75.5%, up from 72% in the prior-year quarter. Adjusted operating income rose 95% to $267 million from $137 million. 

The company exited the quarter with cash and cash equivalents of $3,498 million, long-term debt of $6,803 million and total equity of $3,806 million. The net cash flow provided for operating activities for the 12 months ended June 30, 2026, was $1,773 million. Capital expenditures during this time amounted to $457 million.

Estee Lauder's FY27 Outlook Points to Further Improvement

For fiscal 2027, Estee Lauder expects organic net sales to rise 3-5%, with growth expected to be stronger in the first half, supported by new product launches, improving travel retail and favorable comparisons. Estee Lauder expects continued rise in Fragrance and Skin Care and a return to growth in Makeup.

Adjusted operating margin is projected at 12.7-13.5%, while adjusted earnings are expected to reach $3.10-$3.35 per share, representing 24-34% growth from fiscal 2026.

The Case for EL Stock

Estee Lauder’s Beauty Reimagined strategy is reshaping how it operates and competes. The One ELC model is helping create a more streamlined organization with fewer layers and silos, clearer roles and greater accountability. The company is also using AI-enabled consumer insights and a unified global media approach to support innovation and improve campaign personalization.

Innovation remains another important pillar of the strategy. Estee Lauder is accelerating launch cycles across Skin Care, Makeup and Fragrance while placing greater emphasis on locally relevant products. In China, the company is increasingly developing products specifically for local consumers through the Shanghai research capabilities, while globally it is supporting hero franchises with new formats, ingredients and product extensions.

The company is also expanding where consumers can discover and purchase its brands. Estee Lauder is increasing exposure to specialty-multi retailers, social commerce and direct-to-consumer platforms while modernizing its digital infrastructure. M·A·C’s expansion into additional channels, its U.S. brand.com launch on Shopify and broader presence on Amazon and TikTok Shop illustrate the company’s push toward a more diversified and consumer-focused distribution model.

Risks to Watch

While these strategic initiatives are strengthening Estee Lauder’s growth platform, execution remains an important risk as it carries out a broad organizational transformation. Estee Lauder is simultaneously modernizing digital platforms, transitioning enterprise-service roles and implementing a unified global media model. Meanwhile, brands such as Bobbi Brown, Too Faced and Aveda continue to face category-specific softness or distribution challenges, keeping the focus on improving brand positioning and channel productivity.

Channel optimization and external uncertainty add another layer of risk. Estee Lauder continues to rationalize underperforming doors while shifting distribution toward specialty retail, social commerce and other growth channels, making execution across channels an area to watch. Tariffs, geopolitical developments and changes in consumer sentiment also remain potential headwinds that could affect demand, costs and the company’s ability to sustain its improving business momentum.

Buy, Sell or Hold the Stock?

Estee Lauder remains well-positioned for further improvement, supported by stronger business momentum, ongoing innovation and broader channel expansion under its Beauty Reimagined strategy. While execution risks, weakness across select brands and external pressures such as tariffs and geopolitical uncertainty remain concerns, the company’s improving operating backdrop supports a balanced outlook.

Given this mix of opportunities and risks, Estee Lauder appears to be a stock worth holding. The company currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Five Below, Inc. FIVE operates as a specialty value retailer in the United States and currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Five Below’s current fiscal-year sales and earnings calls for growth of 15.1% and 36.1%, respectively, from the year-ago reported numbers. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.

Dollar Tree Inc. DLTR is an operator of discount variety stores offering a broad assortment of everyday consumables and discretionary merchandise. The company currently carries a Zacks Rank of 2. DLTR delivered a trailing four-quarter earnings surprise of 32.1%, on average.

The Zacks Consensus Estimate for Dollar Tree’s current fiscal-year sales and EPS indicates growth of 6.5% and 21.7%, respectively, from the year-ago reported numbers. 

Dollar General Corporation DG is one of the largest discount retailers in the United States, selling low-priced merchandise, typically $10 or less. The company currently has a Zacks Rank of 2. DG delivered a trailing four-quarter earnings surprise of 21%, on average.

The Zacks Consensus Estimate for Dollar General’s current fiscal-year sales and EPS is expected to rise 3.9% and 7.6%, respectively, from the year-ago reported figures. 

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research