Estée Lauder vs. SP 500: Performance Analysis and Investment Considerations
Introduction
In 2007-2008, the global financial crisis left a significant impact on the stock market. While many companies saw their value decline, Estée Lauder Companies (EL) emerged as a notable outlier. This article examines the performance of EL stock during the crisis and compares it to the broader market, represented by the Standard & Poor's 500 (SP 500) index.
EL Performance During the Crisis
* EL stock price declined from nearly $11 in September 2007 to $6 in March 2009, a drop of approximately 45%. * However, it outperformed the SP 500, which plummeted by over 50% during the same period. * This outperformance suggests that investors perceived EL as a relatively safe haven during the market turmoil.
Post-Crisis Recovery
* EL stock rebounded swiftly after the market bottomed out in March 2009. * By September 2009, it had regained its pre-crisis level of $11. * In contrast, the SP 500 took several years to recover fully from the losses incurred during the crisis.
Valuation and Outlook
* Estée Lauder's current valuation is estimated to be $163 per share, representing an approximately 10% upside from its current levels of $149. * Analysts view EL as a more attractive investment compared to its peer, L'Oréal (OTCMKTS: LRLCY). * These ratings convey expectations for the relative performance of Estée Lauder Cos compared to the broader market.
Conclusion
Estée Lauder's stock performance during the 2007-08 financial crisis highlights its resilience and defensive characteristics. Its ability to outperform the market during a period of extreme volatility suggests that it may be a suitable investment for investors seeking stability in their portfolios. The company's strong valuation and positive analyst ratings further support the case for its continued growth and investor confidence.
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