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Investment world gives the thumbs up to Estée Lauder

By Simon Pitman , 18-Oct-2012

Estée Lauder’s strong revenue growth, solid financial position and rising profit margin is giving the company a good reputation with the financial world.

Financial analysis provider Street.com has become the latest in a line of experts to give its approval to the direction the business is going in and to recommend it as a good investment for shareholders looking for a solid return in the consumer goods sector.

“TheStreet Ratings rates Estée Lauder Cos as a buy,” the company said in a statement, favorably comparing the company’s share price performance to other consumer goods companies.

Currently the company’s shares are trading at approximately $64.70, and have been steadily rising during the course of the past year. This time last year the company’s share price hit a low of $47.00.

Strenght in multiple areas

“The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins.”

The analysts at TheStreet added that they believed the current strengths in the business outweigh the fact that it shows some weakness in its operating cash flow.

Earlier in the month, online financial resource Motley Fool pointed to Estée Lauders revenue growth, margins, balance sheet, current valuation and money making opportunities as indications that the company was a solid investment, although it did point out that revenue growth had slowed in the past year.

Back in August the company reported a strong rise in full year and third quarter sales as a result of continued sales growth in the US, China, as well as its travel retail business and e-commerce platform.

Sales for the third quarter were up nine percent on a reported basis to $2.25bn, which led to a 22 percent jump in net earnings, to $52.2bn.

Full year sales up by 10 percent

Sales for the full fiscal year 2012 sales grew by 10 percent to $9.71bn, compared to $8.81bn in the corresponding period last year, a figure that was also reported as a 10 percent increase excluding the impact of currency translation.

Fiscal full year 2012 sales also helped to push net profits, which were up 21 percent to $901.0bn.

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