Turnaround Gaining Traction; Assume Coverage with Overweight

研报英文原文证据摘录

Turnaround Gaining Traction; Assume Coverage with Overweight

this channel to continue to drift lower (pencil in 15-16% penetration over the Shares Out (mil) 361.4

next 2-3 years vs. 20%+ in the FY21-FY25 time frame). Good news is that Travel Retail Market Cap. (mil) US$29,212.0

is stabilizing faster than initial expectations at ~15% penetration (inline with the industry). Total Assets ($mil) 19,900

Avg Daily Vol (000) 4,484

Book Value/Share US$15.06

• Thoughts on the FY27 model. On the F3Q26 print two weeks ago, EL guided for Price/Book 537%

organic sales to accelerate into FY27 (typically out-year outlook is provided on F4Q); Net Cash Per Share US$(1.57)

expectations for 12.5%-13.0% EBIT margins for FY27 imply ~500 bps expansion from Debt to Total Capital 48.0%

when PRGP began in FY25, although EL has not benefited from leverage, an opportunity Div (ann) US$2.40

if sales come in at the high end of the 3-5% range guided for and as the cost structure is Div Yield 2.97%

becoming more variable. Given puts & takes with US distribution (Ulta exit out of Target Fiscal Year End Jun

this August, Saks door closures still ongoing)—we expect inflection in Americas to be

Price Performance - 1 Year

more F2H27 weighted.

USD

• What's the right valuation? EL is trading at 12x FY27E EBITDA, a discount to 15x 120

average in '25 and 16x 3-year average, with a high of 22x in June ’23 (when sales growth

bounced back) and a low of 11x last August (given tariff uncertainty). The multiple already 110

compressed by 1-2x after the news of deal talks with Puig broke out—while a transaction 100

of this size now would increase complexity in the midst of a turnaround, it fills gaps in 90

EL's portfolio and diversifies geo exposure, at an attractive price, in our view—using the 80