Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Estée Lauder Cos. Inc. (NYSE:EL)

Analysis of Goodwill and Intangible Assets

Advanced level


Goodwill and Intangible Asset Disclosure

Estée Lauder Cos. Inc., balance sheet: goodwill and intangible assets

US$ in millions

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Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Goodwill 1,401  1,868  1,926  1,916  1,228  1,145 
Customer lists and other 1,590  684  697  696  299  294 
License agreements 43  43  43  43  43  43 
Amortizable intangible assets, gross carrying value 1,633  727  740  739  342  337 
Accumulated amortization (518) (412) (375) (322) (287) (272)
Amortizable intangible assets, net book value 1,115  315  365  417  55  66 
Trademarks and other 1,223  888  911  910  290  261 
Non-amortizable intangible assets 1,223  888  911  910  290  261 
Intangible assets 2,338  1,203  1,276  1,327  345  327 
Goodwill and other intangible assets 3,739  3,071  3,202  3,243  1,572  1,471 

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Estée Lauder Cos. Inc.’s goodwill decreased from 2018 to 2019 and from 2019 to 2020.
Intangible assets Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Estée Lauder Cos. Inc.’s intangible assets decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Goodwill and other intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Estée Lauder Cos. Inc.’s goodwill and other intangible assets decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Adjustments to Financial Statements: Removal of Goodwill

Estée Lauder Cos. Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Adjustment to Total Assets
Total assets (as reported) 17,781  13,156  12,567  11,568  9,223  8,239 
Less: Goodwill 1,401  1,868  1,926  1,916  1,228  1,145 
Total assets (adjusted) 16,380  11,288  10,641  9,652  7,996  7,094 
Adjustment to Stockholders’ Equity, The Estée Lauder Companies Inc.
Stockholders’ equity, The Estée Lauder Companies Inc. (as reported) 3,935  4,386  4,688  4,384  3,572  3,643 
Less: Goodwill 1,401  1,868  1,926  1,916  1,228  1,145 
Stockholders’ equity, The Estée Lauder Companies Inc. (adjusted) 2,534  2,518  2,762  2,468  2,344  2,498 
Adjustment to Net Earnings Attributable To The Estée Lauder Companies Inc.
Net earnings attributable to The Estée Lauder Companies Inc. (as reported) 684  1,785  1,108  1,249  1,115  1,089 
Add: Goodwill impairment charges 812  68  —  28  —  — 
Net earnings attributable to The Estée Lauder Companies Inc. (adjusted) 1,496  1,853  1,108  1,277  1,115  1,089 

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).


Estée Lauder Cos. Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Estée Lauder Cos. Inc., adjusted financial ratios

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Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Net Profit Margin
Reported net profit margin 4.79% 12.01% 8.10% 10.56% 9.90% 10.10%
Adjusted net profit margin 10.47% 12.47% 8.10% 10.80% 9.90% 10.10%
Total Asset Turnover
Reported total asset turnover 0.80 1.13 1.09 1.02 1.22 1.31
Adjusted total asset turnover 0.87 1.32 1.29 1.23 1.41 1.52
Financial Leverage
Reported financial leverage 4.52 3.00 2.68 2.64 2.58 2.26
Adjusted financial leverage 6.46 4.48 3.85 3.91 3.41 2.84
Return on Equity (ROE)
Reported ROE 17.38% 40.70% 23.63% 28.49% 31.20% 29.89%
Adjusted ROE 59.04% 73.59% 40.12% 51.74% 47.55% 43.58%
Return on Assets (ROA)
Reported ROA 3.85% 13.57% 8.82% 10.80% 12.08% 13.22%
Adjusted ROA 9.13% 16.42% 10.41% 13.23% 13.94% 15.35%

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Estée Lauder Cos. Inc.’s adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Estée Lauder Cos. Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Estée Lauder Cos. Inc.’s adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Estée Lauder Cos. Inc.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Estée Lauder Cos. Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Estée Lauder Cos. Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc. 684  1,785  1,108  1,249  1,115  1,089 
Net sales 14,294  14,863  13,683  11,824  11,262  10,780 
Profitability Ratio
Net profit margin1 4.79% 12.01% 8.10% 10.56% 9.90% 10.10%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc. 1,496  1,853  1,108  1,277  1,115  1,089 
Net sales 14,294  14,863  13,683  11,824  11,262  10,780 
Profitability Ratio
Adjusted net profit margin2 10.47% 12.47% 8.10% 10.80% 9.90% 10.10%

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

2020 Calculations

1 Net profit margin = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Net sales
= 100 × 684 ÷ 14,294 = 4.79%

2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Net sales
= 100 × 1,496 ÷ 14,294 = 10.47%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Estée Lauder Cos. Inc.’s adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 14,294  14,863  13,683  11,824  11,262  10,780 
Total assets 17,781  13,156  12,567  11,568  9,223  8,239 
Activity Ratio
Total asset turnover1 0.80 1.13 1.09 1.02 1.22 1.31
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 14,294  14,863  13,683  11,824  11,262  10,780 
Adjusted total assets 16,380  11,288  10,641  9,652  7,996  7,094 
Activity Ratio
Adjusted total asset turnover2 0.87 1.32 1.29 1.23 1.41 1.52

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 14,294 ÷ 17,781 = 0.80

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 14,294 ÷ 16,380 = 0.87

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Estée Lauder Cos. Inc.’s adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 17,781  13,156  12,567  11,568  9,223  8,239 
Stockholders’ equity, The Estée Lauder Companies Inc. 3,935  4,386  4,688  4,384  3,572  3,643 
Solvency Ratio
Financial leverage1 4.52 3.00 2.68 2.64 2.58 2.26
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 16,380  11,288  10,641  9,652  7,996  7,094 
Adjusted stockholders’ equity, The Estée Lauder Companies Inc. 2,534  2,518  2,762  2,468  2,344  2,498 
Solvency Ratio
Adjusted financial leverage2 6.46 4.48 3.85 3.91 3.41 2.84

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

2020 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 17,781 ÷ 3,935 = 4.52

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
= 16,380 ÷ 2,534 = 6.46

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.
Estée Lauder Cos. Inc.’s adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc. 684  1,785  1,108  1,249  1,115  1,089 
Stockholders’ equity, The Estée Lauder Companies Inc. 3,935  4,386  4,688  4,384  3,572  3,643 
Profitability Ratio
ROE1 17.38% 40.70% 23.63% 28.49% 31.20% 29.89%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc. 1,496  1,853  1,108  1,277  1,115  1,089 
Adjusted stockholders’ equity, The Estée Lauder Companies Inc. 2,534  2,518  2,762  2,468  2,344  2,498 
Profitability Ratio
Adjusted ROE2 59.04% 73.59% 40.12% 51.74% 47.55% 43.58%

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

2020 Calculations

1 ROE = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 100 × 684 ÷ 3,935 = 17.38%

2 Adjusted ROE = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
= 100 × 1,496 ÷ 2,534 = 59.04%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Estée Lauder Cos. Inc.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to The Estée Lauder Companies Inc. 684  1,785  1,108  1,249  1,115  1,089 
Total assets 17,781  13,156  12,567  11,568  9,223  8,239 
Profitability Ratio
ROA1 3.85% 13.57% 8.82% 10.80% 12.08% 13.22%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to The Estée Lauder Companies Inc. 1,496  1,853  1,108  1,277  1,115  1,089 
Adjusted total assets 16,380  11,288  10,641  9,652  7,996  7,094 
Profitability Ratio
Adjusted ROA2 9.13% 16.42% 10.41% 13.23% 13.94% 15.35%

Based on: 10-K (filing date: 2020-08-28), 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20).

2020 Calculations

1 ROA = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Total assets
= 100 × 684 ÷ 17,781 = 3.85%

2 Adjusted ROA = 100 × Adjusted net earnings attributable to The Estée Lauder Companies Inc. ÷ Adjusted total assets
= 100 × 1,496 ÷ 16,380 = 9.13%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Estée Lauder Cos. Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.