Estée Lauder (EL) — 2Q26 Earnings Review

Maintaining BUY at $147 PT | February 6, 2026

Margin-led recovery accelerating: Organic sales +4% YoY, but profitability inflected meaningfully, with adjusted operating margin +290 bps YoY to 14.4% and adjusted EPS +43% to $0.89 — reinforcing that earnings recovery is mix- and leverage-driven rather than volume-led
Gross margin resilience despite headwinds: Gross margin expanded 40 bps YoY to 76.5%, overcoming tariff and inflation pressures, supported by ~6% organic growth in Skin Care and Fragrance, EL’s highest-margin categories
Makeup drag is timing-related, not structural: Temporary margin pressure from returns ahead of innovation launches (Double Wear, Clinique resets). We expect 2H improvement as innovation ramps and distribution normalizes
Recovery not balance-sheet engineered: Inventory stabilized (~1.7x turns expected FY26) with no incremental liquidation benefit embedded in our model — margin reset appears operational and durable, not working-capital-driven
Guidance raised; reinvestment cadence intentional: FY26 organic sales 1–3%, adj. operating margin 9.8–10.2%, EPS $2.05–$2.25. Management flagged 3Q margin step-down from reinvestment and tariffs, with 4Q reacceleration — we view this as strategic reinvestment, not deterioration
Cash flow inflection ahead: FY26 OCF guided to $1.1–$1.2B (peak restructuring cash). Our model assumes $1.6B OCF and $1.1B FCF in FY26, inflecting to $2.3B OCF and $1.7B FCF in FY27 as restructuring headwinds roll off
Valuation disconnect remains: At ~15x FY27E EV/EBITDA, EL screens inexpensive relative to normalized earnings power. Our $147 PT reflects 17x normalized FY30 EBITDA, implying material upside as focus shifts from FY26 transition to FY27–FY28 cash normalization

Download EL 2Q26 Earnings Review

Estée Lauder (EL) — Initiation

“From Volume to Value” | January 4, 2026

Initiating at BUY, $143 PT as EL exits a volume-driven reset with a structurally higher-quality earnings profile emerging
Channel mix reset away from low-quality travel retail and promotional China demand improves margin durability and inventory turns
Inventory & working capital normalization reduces markdown risk and drives a free cash flow growth inflection ahead of EPS recovery
Prestige portfolio polarization (skincare + fragrance) anchors earnings quality with low elasticity, repeat purchases, and strong gifting dynamics
Margins normalize before revenue as reduced promotional volatility enables higher incremental margins on stabilized volume
Valuation anchored to normalized earnings power, not near-term disruption: 17× EV/EBITDA on FY2030E reflects restored earnings quality and lower volatility
Re-rating catalyst: market shifts focus from backward disruption to forward earnings durability and cash generation

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The RealReal (REAL) — 3Q25 Earnings Review

Maintaining BUY at $18.59 PT | November 13, 2025

Re-acceleration confirmed: 3Q results marked a clear step out of the turnaround phase, with GMV +20% YoY and revenue +17% YoY, driven by balanced unit growth, pricing, and continued mix shift toward higher-value categories
Margins inflecting meaningfully: Adjusted EBITDA margin expanded 434 bps YoY to 5.4%, reflecting stronger gross profit, improved direct margins, and tangible operating leverage across SG&A
Free cash flow growth acceleration: Free cash flow approximately doubled sequentially in 3Q, underscoring REAL’s transition to self-funded growth and improving unit economics
Guidance raised; momentum sustained: Management increased both 4Q and FY25 guidance, calling for continued GMV growth and further margin expansion, with early 2026 tracking toward the upper end of the medium-term growth outlook
Thesis reinforced: Strengthening supply trends, improving category mix, and scaling efficiencies from Athena support sustained EBITDA expansion into 2026 and an increasingly attractive risk-reward profile at current levels

Download REAL 3Q25 Earnings Review

The RealReal (REAL) — Initiation

"A New Dawn for Consignment" | August 7, 2024

Initiating at BUY, $6.45 PT on a structural reset toward a higher-margin, capital-light consignment model
Sunsetting direct sales eliminates inventory risk and drives meaningful gross margin expansion
Core consignment business positioned for double-digit growth as operational focus sharpens and mix improves
Leadership reset strengthens execution, with a new Chairperson and CFO bringing deep luxury and tech-enabled consumer experience
Margin expansion drives profitability inflection, with EBITDA turning positive as fixed costs are leveraged on a cleaner revenue base
Macro tailwind from Fed easing supports discretionary demand for second-hand luxury goods
Valuation reflects inflection, not peak margins: 1.3× EV/Sales on CY25E implies upside as profitability replaces survival narrative

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Estée Lauder (EL) — 2Q26 Earnings Review

Estée Lauder (EL) — Initiation

The RealReal (REAL) — 3Q25 Earnings Review

The RealReal (REAL) — Initiation

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