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The Estee Lauder (MEX:EL) Financial Strength : 5 (As of Mar. 2024)


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What is The Estee Lauder Financial Strength?

The Estee Lauder has the Financial Strength Rank of 5.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

The Estee Lauder's Interest Coverage for the quarter that ended in Mar. 2024 was 5.84. The Estee Lauder's debt to revenue ratio for the quarter that ended in Mar. 2024 was 0.62. As of today, The Estee Lauder's Altman Z-Score is 3.28.


Competitive Comparison of The Estee Lauder's Financial Strength

For the Household & Personal Products subindustry, The Estee Lauder's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


The Estee Lauder's Financial Strength Distribution in the Consumer Packaged Goods Industry

For the Consumer Packaged Goods industry and Consumer Defensive sector, The Estee Lauder's Financial Strength distribution charts can be found below:

* The bar in red indicates where The Estee Lauder's Financial Strength falls into.



The Estee Lauder Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

The Estee Lauder's Interest Expense for the months ended in Mar. 2024 was MXN-1,560 Mil. Its Operating Income for the months ended in Mar. 2024 was MXN9,111 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Mar. 2024 was MXN148,902 Mil.

The Estee Lauder's Interest Coverage for the quarter that ended in Mar. 2024 is

Interest Coverage=-1*Operating Income (Q: Mar. 2024 )/Interest Expense (Q: Mar. 2024 )
=-1*9111.344/-1560.048
=5.84

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

The Estee Lauder's Debt to Revenue Ratio for the quarter that ended in Mar. 2024 is

Debt to Revenue Ratio=Total Debt (Q: Mar. 2024 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(14405.549 + 148901.6) / 261556.98
=0.62

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

The Estee Lauder has a Z-score of 3.28, indicating it is in Safe Zones. This implies the Z-Score is strong.

Good Sign:

Altman Z-score of 3.28 is strong.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


The Estee Lauder  (MEX:EL) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

The Estee Lauder has the Financial Strength Rank of 5.


The Estee Lauder Financial Strength Related Terms

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The Estee Lauder (MEX:EL) Business Description

Address
767 Fifth Avenue, New York, NY, USA, 10153
Estee Lauder is a leader in the global prestige beauty market, participating across skin care (56% of 2022 sales), makeup (26%), fragrance (14%), and hair care (4%) categories, with top-selling brands such as Estee Lauder, Clinique, M.A.C, La Mer, Jo Malone London, Aveda, Bobbi Brown, and Origins. The firm operates in more than 150 countries, generating 26% of revenue from the Americas, 43% from Europe, the Middle East and Africa (including travel retail), and 31% from Asia Pacific. Estee Lauder sells its products through department stores, travel retail, specialty multibrand beauty stores, brand-dedicated freestanding stores, e-commerce, salons/spas, and perfumeries.