As of June 13, 2025, Estee Lauder Companies Inc's estimated intrinsic value ranges from $28.12 to $73.43 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $73.43 | +4.9% |
| Discounted Cash Flow (5Y) | $69.12 | -1.2% |
| Dividend Discount Model (Multi-Stage) | $41.47 | -40.7% |
| Earnings Power Value | $28.12 | -59.8% |
Is Estee Lauder Companies Inc (EL) undervalued or overvalued?
With the current market price at $69.99, the stock appears to be moderately overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Estee Lauder Companies Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.75 | 0.88 |
| Cost of equity | 7.3% | 9.8% |
| Cost of debt | 4.0% | 5.6% |
| Tax rate | 24.9% | 30.0% |
| Debt/Equity ratio | 0.32 | 0.32 |
| After-tax WACC | 6.3% | 8.4% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $69 | $29,538M | 83.0% |
| 10-Year Growth | $73 | $31,088M | 67.6% |
| 5-Year EBITDA | $41 | $19,566M | 74.3% |
| 10-Year EBITDA | $51 | $22,839M | 55.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,062M |
| Discount Rate (WACC) | 8.4% - 6.3% |
| Enterprise Value | $12,672M - $16,902M |
| Net Debt | $4,670M |
| Equity Value | $8,002M - $12,232M |
| Outstanding Shares | 360M |
| Fair Value | $22 - $34 |
| Selected Fair Value | $28.12 |
| Metric | Value |
|---|---|
| Market Capitalization | $25179M |
| Enterprise Value | $29849M |
| Trailing P/E | 0.00 |
| Forward P/E | 37.65 |
| Trailing EV/EBITDA | 6.25 |
| Current Dividend Yield | 296.00% |
| Dividend Growth Rate (5Y) | 17.14% |
| Debt-to-Equity Ratio | 0.32 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $22.03 |
| Discounted Cash Flow (5Y) | 29% | $17.28 |
| Dividend Discount Model (Multi-Stage) | 24% | $8.29 |
| Earnings Power Value | 12% | $2.81 |
| Weighted Average | 100% | $59.32 |
Based on our comprehensive valuation analysis, Estee Lauder Companies Inc's weighted average intrinsic value is $59.32, which is approximately 15.3% below the current market price of $69.99.
Key investment considerations:
Given these factors, we believe Estee Lauder Companies Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.