Shares of Estee Lauder (NYSE:EL) were rising last month after the cosmetics giant turned in a strong second-quarter earnings report. Like other beauty companies, Estee Lauder appears to be benefiting from surging sales in the prestige-beauty segment. According to data from S&P Global Market Intelligence, the stock finished February up 15%.
As the chart below shows, the bulk of the stock's gains in the month came at the beginning of February after the company reported earnings.
Estee Lauder's stock rose 12% on Feb. 5 as the company announced second-quarter results, beating estimates on the top and bottom lines. A strong performance in China buoyed overall growth as constant-currency sales rose 20% in the Asia/Pacific region, and prestige beauty accelerated in China as the company gained share in that valuable market.
Total revenue rose 7%, or 11% after adjusting for currency exchange and the new revenue recognition standard, to $4 billion, ahead of estimates of $3.92 billion. The company noted the strong growth of brands like Estee Lauder, La Mer, and MAC, and reported sales in the skin care category was up 18%.
With the help of a lower tax rate, adjusted earnings per share rose from $1.52 to $1.86, easily beating expectations of $1.54. CEO Fabrizio Freda said: "We delivered an excellent performance in our fiscal second quarter. Importantly, this was our eighth consecutive quarter of impressive net sales growth that met or exceeded our long-term goal, all while navigating many global macro issues."
Estee Lauder also lifted its full-year guidance for the year, calling for sales to increase 5% to 6%, up from a prior forecast of 4% to 5%. Excluding currency exchange and the new revenue recognition standard, the company sees revenue rising 8% to 9% for the year.
On the bottom line, it now expects adjusted earnings per share of between $4.92 and $5, up from a previous range of $4.73 to $4.82 and higher than the $4.51 it reported last year. With tailwinds in China, skin care, and overall prestige beauty, Estee Lauder looks poised to deliver more solid growth.