Estée Lauder Cos. Inc. (NYSE:EL)

Debt to Equity Ratios

The debt to equity ratio shows volatility over the period. It rose sharply from 0.76 in mid-2018 to 1.56 in mid-2020, indicating increased reliance on debt relative to equity during that time. It then declined to 0.92 in 2021 and slightly increased to 0.97 in 2022, before rising again to 1.45 in 2023. When including operating lease liabilities, the ratio follows a similar pattern but with generally higher values, peaking at 2.23 in 2020 and reaching 1.82 in 2023.

Debt to Capital Ratios

The debt to capital ratio, which measures debt as a proportion of total capital, increased substantially from 0.43 in 2018 to 0.61 in 2020. It then decreased in 2021 and 2022 to around 0.48-0.49, before increasing again to 0.59 in 2023. Including operating lease liabilities yields higher ratios, with the peak at 0.69 in 2020 and a recent value of 0.65 in 2023. This reflects a similar trend of increased leverage followed by partial deleveraging and a recent uptick.

Debt to Assets Ratios

The debt to assets ratio also shows an increase in 2020, from 0.28-0.26 range in 2018-2019 to 0.35 (excluding leases) and up to 0.49 (including leases). Following 2020, the ratio declined to around 0.25-0.26 in 2021 and 2022 before rising again to 0.35 (excluding leases) and 0.43 (including leases) in 2023. This pattern aligns with the previous leverage measures, indicating periods of increased debt relative to asset base.

Financial Leverage Ratio

Financial leverage, expressed as a ratio, rose significantly from 2.68 in 2018 to a peak of 4.52 in 2020, suggesting higher utilization of debt financing. After declining to around 3.63-3.74 in 2021-2022, the ratio increased again to 4.19 in 2023, indicating an overall trend towards greater leverage over the six-year period with some fluctuations.

Interest Coverage Ratio

The interest coverage ratio decreased sharply in 2020 to 7.5 from values above 16 in prior years, reflecting reduced ability to cover interest expenses, plausibly impacted by the pandemic environment. It rebounded strongly to above 19 in 2021 and 2022, suggesting improved earnings relative to interest expense. However, a sharp decline to 6.48 in 2023 indicates a notable deterioration in ability to service debt interest again, which may warrant close monitoring.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio mirrors the interest coverage trend, decreasing to a low of 2.33 in 2020, followed by a recovery to 6.18 in 2021 and 5.8 in 2022. The ratio then declined again to 3.0 in 2023, signaling reduced capacity to cover fixed financial obligations. This volatility in coverage ratios suggests fluctuations in earnings relative to fixed costs and debt obligations over the period.

Total Debt

The total debt of the company fluctuated significantly over the analyzed period. It began at $3,544 million in mid-2018 and slightly decreased to $3,412 million in mid-2019. However, there was a notable increase in total debt to $6,136 million in mid-2020, followed by a decline to $5,569 million in mid-2021 and $5,412 million in mid-2022. In the most recent period, mid-2023, total debt surged sharply to $8,114 million. This indicates a considerable expansion in leverage, particularly in the most recent year.

Stockholders' Equity

Stockholders’ equity showed a downward trend initially, falling from $4,688 million in mid-2018 to $3,935 million by mid-2020. Thereafter, equity rebounded strongly to peak at $6,057 million in mid-2021. However, in the two subsequent years, equity slightly decreased, stabilizing around $5,590 million in mid-2022 and $5,585 million in mid-2023. Overall, there was a recovery after 2020, but equity did not maintain its peak level observed in 2021.

Debt to Equity Ratio

The debt to equity ratio followed a pattern that mirrors the trends in debt and equity. It was relatively stable around 0.76–0.78 during 2018 and 2019. The ratio then spiked sharply to 1.56 in mid-2020, indicating a significant increase in leverage relative to equity. This was followed by a reduction to a range just under 1.00 in both mid-2021 and mid-2022 (0.92 and 0.97 respectively), reflecting an improvement in the company’s capital structure. However, a significant increase was again observed in mid-2023 when the ratio rose to 1.45, highlighting an increased reliance on debt financing relative to equity.

Overall Analysis

The company’s financial leverage experienced considerable volatility over the examined period. There was a pronounced increase in debt during 2020, potentially linked to external factors influencing capital structure decisions. While equity recovered and debt to equity ratios improved temporarily in 2021 and 2022, the sharp increase in debt and leverage in 2023 suggests a strategic shift or response to market conditions favoring higher debt levels. Continuous monitoring is advised to assess the sustainability of this increased leverage and its impact on financial stability.

Total Debt (Including Operating Lease Liability)

The total debt exhibited an increasing trend from 2018 to 2023, with notable fluctuations. It initially decreased slightly from 3,544 million USD in 2018 to 3,412 million USD in 2019. Subsequently, there was a significant increase in 2020, reaching 8,789 million USD. Although the debt slightly decreased in 2021 and 2022 to 8,099 million USD and 7,645 million USD respectively, it surged again in 2023 to the highest level of 10,169 million USD during the period analyzed.

Stockholders' Equity

Stockholders’ equity showed a general downward trend from 2018 through 2020, starting at 4,688 million USD and declining to 3,935 million USD by 2020. A sharp recovery occurred in 2021, with equity rising to 6,057 million USD, followed by a mild decline in 2022 and 2023 to 5,590 million USD and 5,585 million USD respectively. Overall, equity levels in the later years remained higher than those at the start of the period, despite recent slight decreases.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt to equity ratio mirrored the trends observed in debt and equity levels. The ratio remained stable around 0.76-0.78 in 2018 and 2019, then experienced a sharp increase to 2.23 in 2020, indicating much higher leverage during that year. The following years saw the ratio decrease to 1.34 in 2021 and stabilize somewhat at 1.37 in 2022, before climbing again to 1.82 in 2023. This suggests an overall increased reliance on debt financing relative to equity, particularly notable in the spike observed in 2020 and the heightened leverage maintained in subsequent years.

Summary

Throughout the analyzed period, the company experienced significant changes in its capital structure, marked by substantial increases in total debt, especially from 2019 to 2020 and again in 2023. Stockholders’ equity declined initially but recovered strongly in 2021 before a slight decrease in the final two years. The debt to equity ratio fluctuated accordingly, reflecting increased financial leverage and indicating a shift towards greater use of debt financing compared to equity. The trends suggest a dynamic approach to financing, with a notable elevation of debt levels and leverage ratios in recent years.

The financial data over the period from June 30, 2018, to June 30, 2023 reveals notable dynamics in the capital structure of the company.

Total Debt

The total debt exhibited fluctuations with an initial modest decline from $3,544 million in 2018 to $3,412 million in 2019. Subsequently, there was a significant increase to $6,136 million in 2020. This was followed by a slight decrease in 2021 and 2022, with figures at $5,569 million and $5,412 million respectively. However, in 2023, total debt rose sharply again to $8,114 million, reaching its highest level within the examined timeframe.

Total Capital

Total capital showed a general upward trend throughout the five years. Starting at $8,232 million in 2018, it decreased slightly in 2019 to $7,798 million. From 2020 onwards, there was consistent growth, with total capital rising to $10,071 million in 2020, $11,626 million in 2021, and peaking at $13,699 million in 2023, despite a minor dip in 2022 to $11,002 million.

Debt to Capital Ratio

The debt to capital ratio, representing the proportion of total debt in the capital structure, mirrored the volatility in debt levels. It increased sharply from 0.44 in 2019 to 0.61 in 2020, indicating a higher reliance on debt financing during that year. This ratio then decreased to 0.48 in 2021 and remained relatively stable at 0.49 in 2022. In 2023, the ratio increased again to 0.59, reflecting the observed rise in total debt relative to capital.

Overall, the data illustrates periods of increased leverage, particularly in 2020 and again in 2023, with the debt to capital ratio fluctuating but remaining elevated compared to earlier years. The growth in total capital suggests an expansion in overall financing, but the increased proportion of debt during certain periods points to a strategic approach involving higher borrowing levels.

Total debt (including operating lease liability)

The total debt exhibits a fluctuating trend over the analyzed period. Initially, it decreased slightly from 3,544 million USD in mid-2018 to 3,412 million USD in mid-2019, indicating a modest reduction. This was followed by a substantial increase to 8,789 million USD by mid-2020, which may suggest increased leverage or financing activities during that period. Although debt somewhat declined to 8,099 million USD by mid-2021 and further to 7,645 million USD by mid-2022, it rose again significantly to 10,169 million USD by mid-2023. Overall, the total debt shows a notable upward trajectory over the six-year span.

Total capital (including operating lease liability)

Total capital also follows an increasing pattern, although with some fluctuations. The capital base grew from 8,232 million USD in mid-2018 to 7,798 million USD in mid-2019, marking a slight contraction. Subsequently, there was a sharp increase to 12,724 million USD in mid-2020, continuing upward to 14,156 million USD in mid-2021. A minor decline to 13,235 million USD was observed by mid-2022, but total capital then surged to 15,754 million USD by mid-2023. This pattern generally reflects expansion in the company's capital structure over time.

Debt to capital (including operating lease liability)

The debt to capital ratio reveals variability in the company's leverage position. The ratio was relatively stable at approximately 0.43 to 0.44 in the first two years, indicating moderate leverage. It then peaked dramatically to 0.69 in mid-2020, signaling increased reliance on debt financing relative to capital. After this peak, the ratio declined to 0.57 in mid-2021 and slightly increased to 0.58 by mid-2022, remaining elevated compared to the initial years. The ratio reached 0.65 in mid-2023, suggesting a greater proportion of debt in the capital mix than in the earlier periods. This indicates a heightened leverage risk profile in recent years.

The financial data reveals significant dynamics in the company’s debt structure and asset base over the six-year period from June 30, 2018 to June 30, 2023.

Total Debt

The total debt exhibited variability, initially decreasing slightly from 3,544 million US dollars in 2018 to 3,412 million in 2019. Thereafter, it rose sharply to 6,136 million in 2020, before declining to 5,569 million in 2021 and 5,412 million in 2022. The year 2023 saw a notable increase again, reaching the highest level of 8,114 million. This upward trend in total debt, especially the spikes in 2020 and 2023, indicates periods of increased leverage or potential capital raising through borrowing.

Total Assets

The asset base showed a consistent upward trend throughout the period, starting at 12,567 million US dollars in 2018 and expanding every year with a marked increase in 2020 to 17,781 million. The growth continued, peaking at 23,415 million in 2023, representing a nearly 86% increase over six years. This steady expansion in assets suggests ongoing investment and potentially enhanced operational capacity or acquisitions.

Debt to Assets Ratio

The debt to assets ratio fluctuated within a moderate range, reflecting changes in the relative proportion of debt financing. Beginning at 0.28 in 2018, the ratio decreased slightly to 0.26 in 2019, peaked at 0.35 in 2020, then decreased back to around 0.25-0.26 in 2021 and 2022, before rising again to 0.35 in 2023. The pattern indicates that despite a growing asset base, the company’s reliance on debt financing intensified notably in 2020 and 2023, aligning with the spikes seen in total debt.

Overall, the company has expanded its asset base substantially over the years, while its debt level has been more volatile, with significant increases in 2020 and 2023. These fluctuations in leverage suggest strategic borrowing decisions possibly driven by investment opportunities or financial restructuring. The debt to assets ratio maintains a broad range around 0.25 to 0.35, indicating a cautious but flexible approach to capital structure management.

Total debt (including operating lease liability)

The total debt level showed a notable increase starting from 2019. Initially, debt was recorded at 3,412 million USD in 2019, which then surged dramatically to 8,789 million USD in 2020, indicating a substantial rise in leverage during that period. Following this peak, there was a slight reduction to 8,099 million USD in 2021 and further down to 7,645 million USD in 2022. However, debt levels rose again to 10,169 million USD by 2023, reaching the highest level in the observed timeframe.

Total assets

Assets exhibited a consistent upward trend throughout the period. From 12,567 million USD in 2018, total assets increased steadily each year, surpassing 20,000 million USD by 2021 and continuing to rise to 23,415 million USD by mid-2023. This growth suggests ongoing asset accumulation or valuation enhancement over the years.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio fluctuated in response to changes in both debt and asset values. Starting at 0.28 in 2018, the ratio decreased slightly to 0.26 in 2019, reflecting a relatively stable leverage position. However, with the sharp rise in debt in 2020, the ratio jumped significantly to 0.49, indicating increased financial risk. In the following years, the ratio declined to 0.37 in 2021 and remained steady in 2022 before increasing again to 0.43 in 2023. This pattern shows a heightened leverage position in recent years compared to the earlier period, despite the growth in assets.

Total assets

The company exhibited a general upward trend in total assets from 2018 to 2023. Starting at $12.567 billion in 2018, assets increased steadily, reaching a peak of $21.971 billion by mid-2021. Following this peak, a slight decline occurred in 2022 to $20.910 billion, before rising again to $23.415 billion in 2023. This overall growth suggests expansion, potentially through acquisitions, increased capital expenditure, or organic growth.

Stockholders’ equity

Stockholders’ equity experienced a declining trend from 2018 to 2020, dropping from $4.688 billion to $3.935 billion. However, in 2021, a notable recovery took place, with equity rising sharply to $6.057 billion. This gain was followed by modest decreases in subsequent years, settling around $5.585 billion in 2023. The fluctuation in equity could reflect changes in retained earnings, share repurchases, dividend policies, or other equity-influencing transactions.

Financial leverage

Financial leverage, defined as the ratio of total assets to stockholders’ equity, increased from 2.68 in 2018 to 3.00 in 2019, then surged significantly to 4.52 in 2020. This peak was followed by a reduction to 3.63 in 2021, subsequently rising again to 3.74 in 2022 and 4.19 in 2023. The elevated leverage levels during 2020 and again in 2023 indicate increased use of debt or other liabilities relative to equity, which could point to strategic financing decisions or changes in capital structure to fund growth initiatives.

Earnings before interest and tax (EBIT)

The EBIT values demonstrate considerable fluctuation over the six-year period. Starting at 2,108 million USD in 2018, EBIT increased to 2,440 million USD in 2019 before sharply declining to 1,207 million USD in 2020. A notable recovery occurred in 2021 when EBIT surged to 3,504 million USD, followed by a decline to 3,203 million USD in 2022 and a further decrease to 1,652 million USD in 2023. This pattern indicates periods of volatility possibly influenced by external economic or industry-specific factors.

Interest Expense

Interest expense rose gradually from 128 million USD in 2018 to 173 million USD in 2021, reflecting a moderate increase in borrowing costs or debt levels. In 2022, it slightly decreased to 167 million USD but then substantially increased to 255 million USD in 2023, which may suggest increased leverage or higher interest rates impacting the company in the most recent year.

Interest Coverage Ratio

The interest coverage ratio shows significant variation consistent with EBIT trends. It started high at 16.47 in 2018 and improved to 18.35 in 2019, indicating strong ability to cover interest expenses. However, in 2020, the ratio dropped sharply to 7.5, reflecting the EBIT decrease and higher relative interest burden. The ratio recovered impressively to 20.25 in 2021 and remained relatively strong at 19.18 in 2022 before declining again to 6.48 in 2023. The low coverage in 2023 signals increased financial risk and reduced earnings capacity to cover interest obligations during that period.

Earnings before fixed charges and tax

The earnings before fixed charges and tax demonstrated variability across the years. From June 2018 to June 2019, there was an increase from 2,597 million US dollars to 3,023 million US dollars, indicating growth in earnings. However, in June 2020, a notable decline occurred, bringing the figure down to 1,832 million US dollars, representing a significant decrease likely impacted by adverse external conditions. In the subsequent years, earnings recovered strongly in June 2021, reaching a peak of 3,974 million US dollars, before slightly declining to 3,668 million US dollars in June 2022. By June 2023, the earnings dropped again to 2,096 million US dollars, showing inconsistency and sensitivity to external factors over the period.

Fixed charges

Fixed charges exhibited a steady upward trend with minor fluctuations. Beginning at 617 million US dollars in June 2018, fixed charges rose to 716 million US dollars in June 2019 and continued increasing to 786 million US dollars in June 2020. Following this peak, fixed charges decreased somewhat to 643 million US dollars in June 2021 and 632 million US dollars in June 2022. In the most recent year, June 2023, fixed charges increased again to 699 million US dollars. This overall gradual rise in fixed charges suggests increasing fixed obligations over time, albeit with some year-to-year variation.

Fixed charge coverage ratio

The fixed charge coverage ratio portrayed significant fluctuations, reflecting changes in the company's ability to cover fixed charges with earnings before fixed charges and tax. The ratio was relatively stable and strong in June 2018 and June 2019 at approximately 4.2, indicating comfortable coverage. It then sharply declined to 2.33 in June 2020, coinciding with the drop in earnings, implying a reduced buffer and higher risk in covering fixed obligations. In June 2021, coverage improved markedly to 6.18, the highest in the period, indicating robust earnings relative to fixed charges. This positive momentum slightly declined to 5.8 by June 2022, and then substantially dropped again to 3 in June 2023. Overall, while the ratio indicates periods of strong coverage, volatility suggests variability in operational performance and fixed charge management.