Shares of Estee Lauder (NYSE: EL) were among the losers today even as the broad market soared in response to former President Trump's victory.
Estee Lauder has struggled badly in recent quarters amid weakness in China, and today's sell-off seems to come in response to another potential trade war between the U.S. and China. Trump also campaigned on tariffs, which could cut into profits for a global company like Estee Lauder.
As a result, the cosmetics stock was down 3.9% as of 2:33 p.m. ET. That compared to a 2.5% decline in iShares MSCI China ETF, showing investors turning away from China stocks.
Image source: Getty Images.
Estee Lauder's problems continue
Estee Lauder stock is down sharply from its pandemic peak in large part due to its challenges in China, and the stock continued to get left behind today as investors shifted toward cyclical stocks like financials and energy, which are expected to do well in a Trump administration, and away from consumer staples like Estee Lauder.
Tariffs did weigh on the business in the first Trump administration, though CEO Fabrizio Freda attempted to tamp down concerns about tariffs back in 2018.
If Trump imposes tariffs this time around, China could respond in kind, leading to higher costs for Estee Lauder in two of its key markets.
Can Estee Lauder bounce back?
The cosmetics giant is down more than 80% from its pandemic-era peak, and the company continues to implement its recovery and growth plan.
Organic sales fell 5% in its fiscal first quarter. It slashed its dividend, and it pulled its fiscal 2025 guidance, reflecting challenges in China.
It won't be easy for the company to return to growth without a recovery in China, and a new tariff regime would only make that more difficult.
Should you invest $1,000 in Estée Lauder Companies right now?
Before you buy stock in Estée Lauder Companies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Estée Lauder Companies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $857,383!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of November 4, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
