Estee Lauder Companies Inc (EL)
Profitability ratios
Return on sales
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 73.11% | 72.27% | 76.53% | 77.35% | 75.84% |
| Operating profit margin | 6.34% | 9.61% | 18.06% | 16.36% | 4.28% |
| Pretax margin | 5.05% | 8.90% | 17.26% | 20.73% | 7.30% |
| Net profit margin | 2.67% | 6.43% | 13.68% | 17.89% | 4.83% |
Estee Lauder Companies Inc has shown fluctuating profitability ratios over the past five years. The gross profit margin has ranged from 72.27% to 77.35%, indicating the company's ability to generate profit from its sales after deducting the cost of goods sold. However, there was a slight decrease in the gross profit margin from 2022 to 2024.
The operating profit margin has also varied significantly, ranging from 4.28% to 18.06%. This ratio reflects the company's ability to generate profit from its core operations before considering interest and taxes. The substantial decrease in operating profit margin in 2024 compared to the previous years suggests potential inefficiencies in managing operating expenses.
The pretax margin, representing the proportion of profit before taxes relative to total revenue, has shown a declining trend from 20.73% in 2021 to 5.05% in 2024. This decline indicates that the company's profitability before taxes has decreased significantly over the past few years.
The net profit margin, which shows the percentage of revenue that translates into net income after all expenses, has also fluctuated, ranging from 2.67% to 17.89%. The sharp decline in the net profit margin in 2024 compared to the previous years indicates a substantial decrease in the company's bottom-line profitability.
In conclusion, Estee Lauder Companies Inc has experienced varying levels of profitability over the past five years, with a notable decrease in profitability ratios in 2024. Investors and analysts may need to further investigate the factors contributing to these fluctuations in profitability to assess the company's financial health and future prospects.
Return on investment
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.47% | 6.44% | 15.16% | 11.92% | 3.41% |
| Return on assets (ROA) | 1.89% | 4.31% | 11.48% | 13.03% | 3.85% |
| Return on total capital | 18.25% | 27.02% | 56.71% | 43.22% | 30.37% |
| Return on equity (ROE) | 7.70% | 18.08% | 42.95% | 47.27% | 17.38% |
Estee Lauder Companies Inc's profitability ratios indicate varying levels of performance over the past five years.
1. Operating return on assets (Operating ROA): This ratio shows the company's ability to generate profits from its assets before considering interest and taxes. Estee Lauder's Operating ROA has been declining over the last three years, from 15.16% in 2022 to 4.47% in 2024. This reduction may suggest that the company's operational efficiency in generating profits from its assets has decreased.
2. Return on assets (ROA): ROA reveals how efficiently the company is utilizing its assets to generate profits. Estee Lauder's ROA has fluctuated over the past five years, with a peak of 13.03% in 2021 and a low of 1.89% in 2024. This inconsistency indicates that the company's profitability in relation to its total assets has been volatile.
3. Return on total capital: This ratio measures the company's ability to generate returns from its total capital, including both debt and equity. Estee Lauder's Return on total capital has also shown fluctuations, with a significant decrease from 56.71% in 2022 to 18.25% in 2024. This drop may suggest a decrease in the company's overall efficiency in utilizing its total capital to generate returns.
4. Return on equity (ROE): ROE evaluates the company's profitability in relation to its shareholders' equity. Estee Lauder's ROE has displayed a similar pattern of fluctuation, with a high of 47.27% in 2021 and a low of 7.70% in 2024. This variability indicates changes in the company's ability to generate profits for its shareholders with the equity invested.
In summary, Estee Lauder Companies Inc's profitability ratios have been inconsistent over the past five years, reflecting fluctuations in the company's ability to generate profits relative to its assets, total capital, and equity. It would be important for the company to closely monitor these ratios and implement strategic measures to improve its overall profitability performance.