Estée Lauder, e.l.f. Beauty, and Church & Dwight could stand out in an otherwise lackluster quarter - J.P. Morgan

[Duty free shops at Eleftherios Venizelos airport in Athens, Greece]
InnaFelker

The third quarter is shaping up to be another mixed bag for the consumer sector as depressed consumer demand, deleveraging of inventory, and an equally tough environment in Europe likely to result in only a few standouts this earnings season.

Out of the nine stocks covered by J.P. Morgan analyst Andrea Teixeira, only three are expected to positively surprise investors this time around. These include:

ESTÉE LAUDER (EL [https://seekingalpha.com/symbol/EL]): Teixeira looks for Estée Lauder to show sequential improvement in revenue and margins in the fiscal first quarter as “management works towards narrowing the gap between sell-in versus shipments, raising her top-line estimate for FQ1 given that management’s guidance for revenue to be down low-single digits is conservative, especially given easy comparisons from the same quarter last year.

Additionally, Estée Lauder (EL [https://seekingalpha.com/symbol/EL]) has lowered its exposure to Asia travel retail -- a segment that has never fully recovered from COVID – to 15% of reported sales from a peak of 29% in FY21.

The company has increased its online presence, and as such, online sales made up an all-time record of 31% of FY25 sales, a 3-percentage point improvement from FY24 (which includes its debut on Amazon Premium). As a result of this new channel for Estée Lauder, Circana data shows a lift in sales continuing with significant growth in ecommerce channels having a “halo effect” on other channels such as specialty retail and DTC.

Estée Lauder (EL [https://seekingalpha.com/symbol/EL]) reports fiscal Q1 results [https://seekingalpha.com/symbol/EL/earnings] before the open on Thursday, October 30.

CHURCH & DWIGHT (CHD [https://seekingalpha.com/symbol/CHD]): “Things are looking up for Church & Dwight amid a conservative outlook,” Teixeira writes.

NielsenIQ tracked channel shows dollar share gains year-over-year for some of Church & Dwight’s (CHD [https://seekingalpha.com/symbol/CHD]) main categories, including laundry, TheraBreath, and cat litter. Additionally, retailer destocking should begin to alleviate, potentially removing most – if not all – of the lingering 100 basis point headwind left in Q2.

Teixeira expects CHD to report Q3 EPS of $0.74 per share versus $0.72 estimates and organic top-line growth of +2%, 23 basis points better than street estimates.

Church & Dwight (CHD [https://seekingalpha.com/symbol/CHD]) reports Q3 results [https://seekingalpha.com/symbol/CHD/earnings]during the trading day on Friday, October 31.

E.L.F. BEAUTY (NYSE:ELF [https://seekingalpha.com/symbol/ELF]): The company did not provide initial FY26 guidance given the uncertainty with the China tariff rates at the time, but Teixeira expects to see upside from the rhode launch at Sephora with “great upside ahead” despite expectations that sales will likely decelerate from elevated levels at the time of the launch.

“We think ELF will continue to support strong demand as the company recruits more consumers from virtually all income and age cohorts, and market share momentum continues to build based on innovation and repeat purchases,” Teixeira says, adding that ELF’s robust sales growth is proof of strong brand equity.”

e.l.f. Beauty is tentatively expected to report Q3 results [https://seekingalpha.com/symbol/ELF/earnings]after the close on Monday, November 3.

MORE ON E.L.F. BEAUTY

* e.l.f. Beauty: Consumer Staples Resilience Offering High Growth And High Margins [https://seekingalpha.com/article/4827844-elf-beauty-consumer-staples-resilience-offering-high-growth-and-high-margins]
* e.l.f. Beauty: Tariffs Tackled, Revenue Acceleration Ahead [https://seekingalpha.com/article/4822914-e-l-f-beauty-tariffs-tackled-revenue-acceleration-ahead]
* e.l.f. Beauty's Meltdown Well Deserved - More Growth/Margin Risks Ahead [https://seekingalpha.com/article/4812986-elf-beautys-meltdown-well-deserved-more-growth-margin-risks-ahead]
* e.l.f. Beauty rallies after Morgan Stanley calls it a retail sector sleeper [https://seekingalpha.com/news/4483177-elf-beauty-rallies-after-morgan-stanley-calls-it-a-retail-sector-sleeper]
* e.l.f. Beauty lists 2.5M merger-issued shares for sale by holders [https://seekingalpha.com/news/4482894-elf-beauty-lists-25m-merger-issued-shares-for-sale-by-holders]