Estee Lauder (EL -3.04%) might be a common name among cosmetics brands, but the company's robust performance, sound management, and promising future make it unique among its competitors. Here are four reasons that make Estee Lauder a stock worth considering:

Great management
Estee Lauder has been a founder-inspired business since its inception with the mission-'Bringing the best to Everyone We touch'. The Lauder family has been successful in building a trusted brand, and it still owns 35% of the business according to Capital IQ data. To take the business to a global platform, it brought in Fabrizio Freda as president and COO in 2008, making him CEO the next year. Freda's rich experience from his successful and long career at Procter & Gamble held him in good stead in his new role. He improved on company's existing marketing and operations strategies, which has been reflected in Estee Lauder's financial performance. Since he joined, the company has shown an astounding improvement in margins and ratios:



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Distinguished sales and marketing
The cosmetics business is more sensitive to quality and appearance than to price. So launching the right product at right time with efficient marketing is crucial. In order to stay ahead of the competition, the marketing team coordinates with skin consultants, consumers, and sales representatives to determine the demands and needs of customers. This helps company ensure that its products are associated with quality and innovation  at retail chains, its biggest source of revenue. In addition, it claims that its products are distinctively placed in the store to attract customers. Recently, I visited a few Macy's stores, which account for more than 10% of Estee Lauder's revenue, to find out how true the claim is. I was pleasantly surprised by the foot space and star treatment Estee Lauder receives from the retail chain as compared to its peers.

Innovative strategy
The company is also focused on making its back-end operation robust and leveraging that to grow revenue. It has launched a "strategic modernization initiative" with the following goals: 

  1. Centralized data repository of the essential attributes of each product to enable the company to globally manufacture and market products of consistent quality
  2. Sales analysis system to track weekly sales at the stock-keeping unit level at the most significant retail sales locations, increasing its ability to understand customer preference and focus marketing effort in that direction
  3. Automatic replenishment system for individual points of sale with minimal paperwork
  4. Inventory management that provides a global view of finished goods availability and forecast requirements.

In addition, realizing the paradigm shift in consumer behavior, Estee Lauder already sells 14 of its brands directly to customers through 120 of its own e-commerce and has also begun selling its products through m-commerce websites.

Growth opportunities
The company has a strong balance sheet and solid presence. Its products are sold in 150 counties. The product portfolio is largely focused on the skin care and makeup division. Currently, the Asia-Pacific region accounts for 20% of the revenue. As disposable income, numbers of working women, and brand consciousness are rising in developing markets, it is positioned very well to tap into the emerging opportunity.

Foolish thoughts
In addition to the factors above, Estee Lauder's dividend grew at a rate 17.92% over the past 10 years, which is among the best of its group of competitors and peers. Estee Lauder is trading at a 12-month trailing P/E of 24.21. Given that its revenue has grown 8.4% annually in the last five years, it is not cheap. But the company definitely deserves a space on your watchlist so that you can quickly jump in if the stock falls a bit due to any external factors.