Is Estée Lauder (EL) a Buy After the Rothschild Downgrade? Valuation, China Strategy and 2025 Catalysts

As of November 29, 2025, Estée Lauder Companies Inc. (NYSE: EL) sits at the center of a sharp valuation debate. The prestige beauty group has just been hit with a Sell rating from Rothschild & Co, even as other Wall Street firms upgrade the stock and long-term models suggest modest upside from today’s price. At the same time, the company is doubling down on China and emerging markets, returning to organic sales growth and rewarding shareholders with a fresh dividend. ^[1]

This article pulls together the latest research and news – including the Simply Wall St valuation work, Seeking Alpha’s “pros and cons” analysis, and Yahoo/Simply Wall St’s emerging‑markets DCF study – and adds in all the key EL headlines around November 29, 2025 to help investors understand what is really going on with Estée Lauder stock.

Note: This article is for informational purposes only and is not financial advice or a recommendation to buy or sell any security.

1. Where Estée Lauder stock stands right now

According to recent market data, Estée Lauder shares closed at about $94.07 on November 28, 2025, giving the company a market capitalization of roughly $33.9 billion. Over the last 12 months, the stock has traded between $48.37 and $104.53, highlighting just how volatile the recovery has been after its post‑pandemic slump. ^[2]

Key valuation and balance‑sheet metrics:

Trailing 12‑month revenue: about $14.45 billion
Trailing 12‑month net income: around –$930 million, meaning the headline P/E is not meaningful yet
Forward P/E: roughly 40x based on consensus earnings estimates
Dividend:$1.40 per share annually, implying a ~1.5% yield at current prices
Ex‑dividend date:November 28, 2025, with a $0.35 quarterly payout due December 15, 2025 ^[3]

On liquidity and leverage, third‑party data show a current ratio near 1.3, quick ratio around 0.9, and debt‑to‑equity between roughly 1.9 and 2.4, which is elevated for a consumer staples name and one of the concerns flagged by more cautious analysts. ^[4]

So investors considering EL today are effectively being asked to pay a premium multiple for an early‑stage earnings recovery in a highly cyclical, globally exposed beauty business.

2. The Rothschild & Co downgrade – and why it matters

The most dramatic recent headline came when Rothschild & Co Redburn cut Estée Lauder from “Neutral” to “Sell” and slashed its price target from $83 to $70. That new target implies roughly 25% downside from current levels, and the move has re‑ignited debate on whether EL is still too expensive after its recent rebound. ^[5]

The downgrade lands in the middle of mixed analyst signals:

Argus Researchupgraded EL to “Buy” on November 11, 2025 with a $105 price target, citing improving fundamentals and a better outlook for China and travel retail. ^[6]
Other brokers, including Telsey Advisory Group and RBC, recently raised their price targets into the low‑$100s while keeping Market Perform / Outperform style ratings. ^[7]
Several bullish notes in October from Goldman Sachs and others highlighted stabilising demand in China, rising fragrance sales and a more aggressive push into TikTok and Amazon as upside drivers. ^[8]

Despite the new Sell call, data aggregated by MarketBeat, GuruFocus and StockAnalysis show that the overall Street view remains neutral‑to‑positive:

Consensus rating: roughly “Hold” to “Buy” (depending on provider)
Analyst mix: around 1 Strong Buy, ~10 Buy, ~10 Hold and 3 Sell ratings
Average 12‑month price target: in the mid‑$90s to around $100, implying low‑single‑digit to high‑single‑digit upside from the latest price ^[9]

In other words, Rothschild is now at the bearish extreme, while the consensus still envisions a modestly higher share price – provided the turnaround remains on track.

3. Is EL undervalued or still too expensive? The valuation tug‑of‑war

3.1 Simply Wall St’s fair‑value estimate

One of the clearest attempts to quantify fair value comes from Simply Wall St, whose latest narrative (also syndicated via Yahoo Finance) uses discounted cash‑flow modelling to estimate a fair value of about $101.87 per share. With the stock around $94, that implies roughly 7–8% undervaluation – hardly a deep bargain, but enough to argue the stock is slightly mispriced to the downside. ^[10]

Importantly, that model bakes in significant margin improvement and continued growth, including from new product launches and a “profit transformation” under Estée Lauder’s turnaround program. If those assumptions prove too optimistic, the apparent undervaluation could disappear.

3.2 Emerging markets push and DCF scenarios

A related analysis, featured on Yahoo Finance under the title “How Does Estée Lauder’s Emerging Markets Push Impact Its 2025 Valuation?”, looks at how faster growth in China and other emerging markets could justify today’s multiple. Using DCF‑style scenarios, it tests how variations in emerging‑market sales growth and margins impact intrinsic value. ^[11]

The broad takeaway from that work:

If emerging markets do deliver high‑single‑digit to low‑double‑digit growth with margins gradually recovering, EL’s current price can be defended or even seen as slightly cheap.
If growth stalls or margins fail to rebound, the stock’s rich forward P/E in the 40x range looks stretched.

3.3 GuruFocus and other metrics: rich by traditional standards

GuruFocus’ breakdown of EL’s financials reinforces the idea that the stock is still not “value territory”:

Price‑to‑sales (P/S): ~2.3
Price‑to‑book (P/B): ~8.3
Forward P/E: about 41–42x
Three‑year revenue growth rate: roughly –6.5%, reflecting the severe post‑pandemic hangover and travel‑retail slump ^[12]

These numbers are elevated relative to many consumer staples peers and suggest that buyers today are paying up for:

A powerful global brand portfolio, and
A multi‑year profit recovery story, not for strong current earnings.

From a pure multiples standpoint, Rothschild’s caution looks understandable, while DCF‑based models see a bit more room for optimism.

4. Fundamentals: what Q1 fiscal 2026 tells us

Estée Lauder’s latest earnings report – Q1 fiscal 2026, covering the quarter ended September 30, 2025 – is the backbone of the bullish case.

According to the company’s Business Wire release, key figures were: ^[13]

Net sales:$3.48 billion, up 4% year‑on‑year
Organic net sales:+3%
Gross margin: expanded by about 100 basis points to 73.4%
Adjusted operating margin: improved from 4.3% to 7.3% (a 300 bps expansion)
Adjusted diluted EPS: up from $0.14 to $0.32

The company describes fiscal 2026 as a “pivotal year” in its “Beauty Reimagined” strategy, aiming to restore organic growth and expand operating margins for the first time in four years. The quarter shows early evidence that this plan is working:

Prestige beauty share gains in key markets such as mainland China, the U.S., and parts of Western Europe
Ongoing cost savings and operational efficiencies under its Profit Recovery and Growth Plan (PRGP)
A more disciplined approach to promotions and inventory management

At the same time, net income for the trailing 12 months remains negative, and margins – while improving – are still well below pre‑pandemic peaks. That gap between improving trends and still‑depressed profitability is exactly why valuation views diverge so sharply. ^[14]

5. China and emerging markets: “The next China is China”

Strategy‑wise, Estée Lauder is making a bold call: China remains the core growth engine, not a risk to be cut back.

In a recent feature, the Financial Times reported that new CEO Stéphane de La Faverie is “doubling down” on the Chinese market and broader Asia, even after the company’s heavy China reliance backfired during the post‑pandemic slowdown and travel‑retail downturn. China accounted for almost 20% of the company’s $14.3 billion in revenue last year, and the new leadership wants to shift the focus further toward the domestic Chinese middle class instead of over‑dependent travel retail channels. ^[15]

At the same time, Estée Lauder is broadening its emerging‑markets footprint:

Taking a strategic minority stake in Mexican luxury fragrance house XINÚ, its first ever investment in a Latin American brand, via its New Incubation Ventures unit ^[16]
Running initiatives such as BEAUTY&YOU India 2025, which supports and scouts local beauty entrepreneurs in one of the world’s fastest‑growing markets ^[17]
Expanding distribution across Amazon marketplaces in Mexico and Canada and on TikTok Shop in multiple countries, pushing deeper into digital channels that are critical for younger consumers ^[18]

Regional revenue is broadly split into Americas (~31%), EMEA including travel retail (~37%), and Asia‑Pacific (~32%), according to GuruFocus data. That spread underlines both the diversification and the macro sensitivity of the business. ^[19]

For investors, the emerging‑markets bet cuts both ways:

If China and other EM markets return to steady premium‑beauty growth, today’s valuation may prove justified.
If consumer spending in those regions remains fragile or geopolitics and regulation worsen, earnings expectations may need to be revised down – validating the more bearish targets.

6. Capital moves: secondary offering, insider and family trust selling

Several major ownership‑related headlines hit EL in November 2025, and they matter for sentiment even if they don’t change the company’s underlying business.

6.1 Secondary offering by Lauder family trusts

On November 4, 2025, Estée Lauder announced that trusts affiliated with descendants of Leonard A. Lauder would sell 11,301,323 Class A shares in a registered secondary offering. The company itself is not issuing new shares and receives no proceeds; all cash goes to the selling stockholders to help settle Leonard Lauder’s estate, including taxes and other obligations. ^[20]

Even after the deal, Lauder family members will still control around 82% of the company’s voting power, and they’ve agreed to a 90‑day lock‑up with the underwriter. ^[21]

6.2 Evelyn H. Lauder trust sale

Separately, on November 6, 2025, the Evelyn H. Lauder 2012 Marital Trust Two sold about 2.85 million EL shares at roughly $89.70 each, a transaction worth around $255 million. After this sale, that particular trust reportedly held zero EL shares. ^[22]

This sale was also executed via an underwritten offering and appears to be driven by estate and trust‑management considerations, but it adds to the perception of heavy insider supply in the market this quarter.

6.3 Institutional flows around November 29, 2025

Fresh 13F‑linked headlines on November 29, 2025 show that institutional investors are also adjusting their positions:

Advisors Asset Management Inc. cut its Estée Lauder holdings by 18.2% in Q2, ending the period with roughly 29,033 shares worth about $2.35 million. ^[23]
Prudential Financial Inc., by contrast, increased its stake by 9.6% in the same quarter to 137,572 shares, valued at just over $11.1 million. ^[24]

These filings underscore a mixed institutional stance: some investors are locking in gains or managing risk, while others are quietly adding exposure to the turnaround story.

7. Dividend and shareholder returns

Despite its uneven earnings, Estée Lauder continues to return cash to shareholders:

The company declared a $0.35 quarterly dividend, with shares trading ex‑dividend on November 28, 2025 and payment scheduled for December 15, 2025. ^[25]
On an annualised basis, that equates to $1.40 per share, or a yield of around 1.5% at current prices. ^[26]

For income‑focused investors, the yield is modest, but the continued payout during a turnaround is often read as a signal of confidence. On the flip side, because earnings are still recovering and leverage is not low, overly aggressive dividend growth is unlikely in the near term.

8. Pros and cons of buying Estée Lauder now

Several recent analyses, including the Seeking Alpha article “The Pros And Cons Of Buying Estée Lauder Now”, highlight the trade‑offs facing potential buyers. While that piece is paywalled, its key talking points align closely with data from the company and other research outlets. ^[27]

8.1 Main positives

Powerful brand portfolio and innovation engine
Estée Lauder owns some of the most desirable prestige beauty names in the world – including Estée Lauder, La Mer, M·A·C, Clinique, Tom Ford Beauty, Jo Malone London, Le Labo and The Ordinary – and continues to launch new hero products in skincare, makeup and fragrance. ^[28]
Early‑stage recovery in sales and margins
Q1 FY2026 showed 4% reported net sales growth, 3% organic growth, and a significant rebound in operating profitability, with adjusted operating margin up to 7.3% and EPS more than doubling year‑on‑year. ^[29]
Strategic push into digital and emerging markets
Investment in XINÚ, partnerships with Shopify, and expanded presence on Amazon and TikTok signal that Estée Lauder is adapting to new shopping habits and localising its portfolio for high‑growth markets. ^[30]
Dividend and long‑term compounding potential
While the current yield is modest, the company has a long history of paying dividends, and if the turnaround takes hold, earnings growth plus even small dividend increases could support long‑term compounding. ^[31]

8.2 Main risks and negatives

Rich valuation versus still‑fragile fundamentals
With a forward P/E above 40x, P/S around 2.3, and P/B above 8x, Estée Lauder trades at a premium that assumes steady growth and continued margin expansion. At the same time, three‑year revenue growth remains negative and net margins are still in the red, which supports the more cautious or bearish views. ^[32]
China and travel‑related risk
Roughly a third of revenue comes from Asia‑Pacific, and China alone has been close to one‑fifth of total sales. While management is convinced that “the next China is China,” any renewed weakness in Chinese consumer spending or travel‑retail traffic could quickly hit results and sentiment. ^[33]
Balance‑sheet leverage and financial health metrics
GuruFocus data show high leverage (debt‑to‑equity above 2x), negative return on equity and assets, and an Altman Z‑Score in the “grey zone”, suggesting investors cannot entirely ignore balance‑sheet risk if the recovery stalls. ^[34]
Quality of growth and working‑capital trends
A recent analysis summarized on StockAnalysis notes that accounts receivable grew by more than 20% year‑on‑year while revenue increased only about 3%, raising questions about whether some of the reported growth reflects extended payment terms or inventory buildup in the channel. ^[35]
Insider and family trust selling pressure
The 11.3 million‑share secondary offering by Lauder family trusts and the $255 million sale by the Evelyn H. Lauder trust add supply to the market and can weigh on sentiment, even if they are largely driven by estate‑planning rather than a lack of confidence in the business. ^[36]
Ongoing competition and promotional intensity
Estée Lauder faces fierce competition from L’Oréal, LVMH’s beauty brands, Coty, e.l.f. Beauty and numerous indie and Korean brands. Promotional activity – including Black Friday deals, warehouse sales and gift‑with‑purchase campaigns – remains intense, which can limit pricing power if consumer demand softens. ^[37]

9. What to watch next

For investors tracking Estée Lauder into 2026, several signposts will be crucial:

China and emerging‑markets sales trends
Are local Chinese sales and other EM markets delivering sustained, profitable growth, or are rebounds short‑lived?
Margin and cash‑flow progress
Does the company continue to expand gross and operating margins while improving operating cash flow and reducing leverage?
Channel health and receivables
Do accounts receivable and inventories normalise relative to sales, indicating healthy demand rather than channel stuffing?
Insider and institutional activity
Once the current wave of estate‑related selling passes, do insiders and long‑term institutions stabilise or rebuild their stakes?
Management communication and execution
Upcoming events – including the company’s fireside chat at Morgan Stanley’s Global Consumer & Retail Conference on December 2, 2025 – will offer more details on strategy execution and expectations. ^[38]