Maritza sells EL 78.73: Stripping out the impact of accelerated orders and one-time charges, sales and diluted earnings would have respectively risen 6% and 12% over the year -- not bad for a mature personal products company.

Excluding currency impacts, sales actually rose 3%, and diluted earnings remained flat. Will these two stocks beautify your portfolio? I am currently long Estee Lauder. Time will tell if such estimation is right. Despite the above, I am still a bit concerned about the FCF growth (hence, higher estimated share price) coming from changes in assets/liabilities, not growth from sales or net income.


Shawanda:
I adjust these two numbers to try to fit the estimated share price with true historical closing prices.

Clementina:
The main two variables in this calculation are: FCF growth rate and discount rate.

Melanie:
You could go for a more complicated version, for example, with two-stage growth rates and discounting at a WACC.

Mellissa:
Therefore, there will usually be some errors in designating categories for each balance sheet entry.

Iluminada:
However, I find the book sometimes confusing and complicated, so I've simplified the valuation approach a bit.

Myesha:
So, subtracting non-equity claims (such as debt) from the enterprise value would yield the equity value, which represents the estimated intrinsic value for equity.

Doria:
The total amount of operating and non-operating assets is equal to the enterprise value.

Maryjane:
On the other hand, non-operating assets and non-equity claims are accepted as the amount shown on the balance sheet.

Paola:
The basic idea behind this approach is that not all assets should be viewed the same way.

Vannessa:
In view of the above, I think all three companies are good at earning above-average returns on their investments.

Estee Lauder Companies (NYSE:EL)
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