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

Estée Lauder Cos. Inc. (NYSE:EL)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Estée Lauder Cos. Inc., future operating lease payments (before adoption of FASB Topic 842)

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
Total undiscounted future operating lease payments 3,382  3,320  2,427  2,111  1,928 
Discount rate1 3.45% 3.39% 3.34% 4.02% 4.66%
 
Total present value of future operating lease payments 2,826  2,777  2,090  1,780  1,577 

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).

1 Weighted-average interest rate for Estée Lauder Cos. Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.45%
2020 421  2020 421  407 
2021 383  2021 383  358 
2022 348  2022 348  314 
2023 316  2023 316  276 
2024 289  2024 289  244 
2025 and thereafter 1,625  2025 289  236 
2026 289  228 
2027 289  220 
2028 289  213 
2029 289  206 
2030 180  124 
Total: 3,382  3,382  2,826 

Based on: 10-K (filing date: 2019-08-23).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.39%
2019 397  2019 397  384 
2020 368  2020 368  344 
2021 322  2021 322  291 
2022 300  2022 300  263 
2023 297  2023 297  251 
2024 and thereafter 1,636  2024 297  243 
2025 297  235 
2026 297  227 
2027 297  220 
2028 297  213 
2029 151  105 
Total: 3,320  3,320  2,777 

Based on: 10-K (filing date: 2018-08-24).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.34%
2018 377  2018 377  365 
2019 349  2019 349  327 
2020 301  2020 301  273 
2021 239  2021 239  210 
2022 212  2022 212  180 
2023 and thereafter 949  2023 212  174 
2024 212  168 
2025 212  163 
2026 212  158 
2027 101  73 
Total: 2,427  2,427  2,090 

Based on: 10-K (filing date: 2017-08-25).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.02%
2017 340  2017 340  327 
2018 328  2018 328  303 
2019 279  2019 279  248 
2020 229  2020 229  196 
2021 178  2021 178  146 
2022 and thereafter 757  2022 178  141 
2023 178  135 
2024 178  130 
2025 178  125 
2026 45  30 
Total: 2,111  2,111  1,780 

Based on: 10-K (filing date: 2016-08-24).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.66%
2016 300  2016 300  286 
2017 279  2017 279  255 
2018 253  2018 253  220 
2019 206  2019 206  171 
2020 169  2020 169  134 
2021 and thereafter 722  2021 169  128 
2022 169  123 
2023 169  117 
2024 169  112 
2025 47  30 
Total: 1,928  1,928  1,577 

Based on: 10-K (filing date: 2015-08-20).


Adjustments to Financial Statements for Operating Leases

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 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  2,826  2,777  2,090  1,780  1,577 
Total assets (adjusted) 17,781  15,982  15,344  13,658  11,004  9,817 
Adjustment to Total Debt
Total debt (as reported) 6,136  3,412  3,544  3,572  2,242  1,637 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  2,826  2,777  2,090  1,780  1,577 
Add: Current operating lease liabilities 375  —  —  —  —  — 
Add: Long-term operating lease liabilities 2,278  —  —  —  —  — 
Total debt (adjusted) 8,789  6,238  6,321  5,662  4,022  3,215 

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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Estée Lauder Cos. Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015
Total Asset Turnover1
Reported total asset turnover 0.80 1.13 1.09 1.02 1.22 1.31
Adjusted total asset turnover 0.80 0.93 0.89 0.87 1.02 1.10
Debt to Equity2
Reported debt to equity 1.56 0.78 0.76 0.81 0.63 0.45
Adjusted debt to equity 2.23 1.42 1.35 1.29 1.13 0.88
Return on Assets3 (ROA)
Reported ROA 3.85% 13.57% 8.82% 10.80% 12.08% 13.22%
Adjusted ROA 3.85% 11.17% 7.22% 9.14% 10.13% 11.09%

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 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 debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Estée Lauder Cos. Inc.’s adjusted debt to equity ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as 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 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 Operating Leases
Selected Financial Data (US$ in millions)
Net sales 14,294  14,863  13,683  11,824  11,262  10,780 
Adjusted total assets 17,781  15,982  15,344  13,658  11,004  9,817 
Activity Ratio
Adjusted total asset turnover2 0.80 0.93 0.89 0.87 1.02 1.10

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 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 ÷ 17,781 = 0.80

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 Debt to Equity

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 debt 6,136  3,412  3,544  3,572  2,242  1,637 
Stockholders’ equity, The Estée Lauder Companies Inc. 3,935  4,386  4,688  4,384  3,572  3,643 
Solvency Ratio
Debt to equity1 1.56 0.78 0.76 0.81 0.63 0.45
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 8,789  6,238  6,321  5,662  4,022  3,215 
Stockholders’ equity, The Estée Lauder Companies Inc. 3,935  4,386  4,688  4,384  3,572  3,643 
Solvency Ratio
Adjusted debt to equity2 2.23 1.42 1.35 1.29 1.13 0.88

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 Debt to equity = Total debt ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 6,136 ÷ 3,935 = 1.56

2 Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= 8,789 ÷ 3,935 = 2.23

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Estée Lauder Cos. Inc.’s adjusted debt-to-equity ratio deteriorated from 2018 to 2019 and 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 Operating Leases
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 
Adjusted total assets 17,781  15,982  15,344  13,658  11,004  9,817 
Profitability Ratio
Adjusted ROA2 3.85% 11.17% 7.22% 9.14% 10.13% 11.09%

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

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as 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.