Estée Lauder (EL -2.11%) stock suffered a makeup malfunction on Tuesday. Shares of the cosmetics giant tumbled 18.3% through 11 a.m. ET, despite beating forecasts for both sales and earnings in its fiscal Q2 2025 report this morning.

Heading into the report, analysts thought Estée Lauder would earn $0.32 per share, adjusted for one-time items, on just under $4 billion in quarterly sales. Instead, Estée Lauder reported $0.62 in profit on sales of $4 billion.

Estée Lauder's Q2 earnings

Estée Lauder's earnings report was still objectively lousy. Sales for the quarter shrank 6% year over year. Gross profit margins expanded, but the company still reported an operating loss. While adjusted earnings were positive, when calculated according to generally accepted accounting principles (GAAP), earnings were deeply negative, and Estée Lauder lost $1.64 per share on the bottom line.

Management blamed "goodwill and other intangible asset impairments" for the huge net loss, but real free cash flow was also cut by more than half, so the noncash charges to earnings are actually only part of the problem.

Is Estée Lauder stock a buy?

And even then, the bad news for Estée Lauder wasn't over. Announcing a new "profit recovery and growth plan" that will run through the next two years at least, management warned it intends to take between $1.2 billion and $1.6 billion in pre-tax charges to restructure its business, and will expand layoffs to cover as any as 5,800 to 7,000 employees.

Earnings will be immediately affected, with guidance for fiscal Q3 predicting at least a 69% year-over-year decline in profit to between $0.24 and $0.34 per share, which is less than half what Wall Street was predicting for Q3. The company's sales decline will also accelerate. After shrinking 6% in Q2, sales will fall by another 10% to 12% in Q3.

With a stock now valued at nearly 150 times trailing earnings, falling sales, falling earnings, and big restructuring charges on the way, I see no good reason to buy Estée Lauder stock today.