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

Estée Lauder Cos. Inc. (NYSE:EL)

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Capital Asset Pricing Model (CAPM)

Intermediate level

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Estée Lauder Cos. Inc.’s common stock.


Rates of Return

Estée Lauder Cos. Inc., monthly rates of return

Microsoft Excel LibreOffice Calc
Estée Lauder Cos. Inc. (EL) Standard & Poor’s 500 (S&P 500)
t Date PriceEL,t1 DividendEL,t1 REL,t2 PriceS&P 500,t RS&P 500,t3
Jul 31, 2014
1. Aug 31, 2014
2. Sep 30, 2014
3. Oct 31, 2014
. . . . . . .
. . . . . . .
. . . . . . .
70. May 31, 2020
71. Jun 30, 2020
Average:
Standard deviation:
Estée Lauder Cos. Inc. (EL) Standard & Poor’s 500 (S&P 500)
t Date PriceEL,t1 DividendEL,t1 REL,t2 PriceS&P 500,t RS&P 500,t3
Jul 31, 2014
1. Aug 31, 2014
2. Sep 30, 2014
3. Oct 31, 2014
4. Nov 30, 2014
5. Dec 31, 2014
6. Jan 31, 2015
7. Feb 28, 2015
8. Mar 31, 2015
9. Apr 30, 2015
10. May 31, 2015
11. Jun 30, 2015
12. Jul 31, 2015
13. Aug 31, 2015
14. Sep 30, 2015
15. Oct 31, 2015
16. Nov 30, 2015
17. Dec 31, 2015
18. Jan 31, 2016
19. Feb 29, 2016
20. Mar 31, 2016
21. Apr 30, 2016
22. May 31, 2016
23. Jun 30, 2016
24. Jul 31, 2016
25. Aug 31, 2016
26. Sep 30, 2016
27. Oct 31, 2016
28. Nov 30, 2016
29. Dec 31, 2016
30. Jan 31, 2017
31. Feb 28, 2017
32. Mar 31, 2017
33. Apr 30, 2017
34. May 31, 2017
35. Jun 30, 2017
36. Jul 31, 2017
37. Aug 31, 2017
38. Sep 30, 2017
39. Oct 31, 2017
40. Nov 30, 2017
41. Dec 31, 2017
42. Jan 31, 2018
43. Feb 28, 2018
44. Mar 31, 2018
45. Apr 30, 2018
46. May 31, 2018
47. Jun 30, 2018
48. Jul 31, 2018
49. Aug 31, 2018
50. Sep 30, 2018
51. Oct 31, 2018
52. Nov 30, 2018
53. Dec 31, 2018
54. Jan 31, 2019
55. Feb 28, 2019
56. Mar 31, 2019
57. Apr 30, 2019
58. May 31, 2019
59. Jun 30, 2019
60. Jul 31, 2019
61. Aug 31, 2019
62. Sep 30, 2019
63. Oct 31, 2019
64. Nov 30, 2019
65. Dec 31, 2019
66. Jan 31, 2020
67. Feb 29, 2020
68. Mar 31, 2020
69. Apr 30, 2020
70. May 31, 2020
71. Jun 30, 2020
Average:
Standard deviation:

Show all

1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of EL during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Systematic Risk (β) Estimation

Microsoft Excel LibreOffice Calc
VarianceEL
VarianceS&P 500
CovarianceEL, S&P 500
Correlation coefficientEL, S&P 5001
βEL2
αEL3

Calculations

1 Correlation coefficientEL, S&P 500
= CovarianceEL, S&P 500 ÷ (Standard deviationEL × Standard deviationS&P 500)
= ÷ ( × )

2 βEL
= CovarianceEL, S&P 500 ÷ VarianceS&P 500
= ÷

3 αEL
= AverageEL – βEL × AverageS&P 500
= ×


Expected Rate of Return

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk (β) of Estée Lauder Cos. Inc.’s common stock βEL
 
Expected rate of return on Estée Lauder Cos. Inc.’s common stock3 E(REL)

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(REL) = RF + βEL [E(RM) – RF]
= + []
=