A Fresh Look at Estée Lauder’s Valuation as Shopify Partnership Sets Stage for Digital Transformation

Estée Lauder Companies (NYSE:EL) has announced a strategic partnership with Shopify. This collaboration will overhaul its digital commerce platform, aiming to modernize how it connects with consumers and streamline shopping experiences across its luxury beauty brands.

See our latest analysis for Estée Lauder Companies.

Estée Lauder’s recent strategic moves, including the Shopify partnership, arrive as the company accelerates its digital transformation and capitalizes on renewed market optimism. The share price is up 34% year-to-date and delivered a 14% total return over the last year, signaling momentum is rebuilding after a multi-year slide. Short-term enthusiasm has been boosted by the rollout of new products, such as Smashbox’s primer launch, and hopes for a turnaround in China and travel retail, even as long-term investors are still weighing a five-year total return that remains deeply negative.

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Yet, with shares rebounding this year and optimism running high for a digital turnaround, investors face a key question: Is Estée Lauder undervalued at these levels, or is the market already factoring in its next phase of growth?

Most Popular Narrative: 3.9% Overvalued

With Estée Lauder trading just above its fair value in the most popular narrative, bulls and skeptics alike are eyeing how aggressive growth bets may pan out in relation to recent share price gains.

Investments in innovation, restructuring, and AI-powered personalization are strengthening brand equity, operational efficiency, and long-term earnings resilience. At the same time, ongoing travel retail weakness, high restructuring costs, overexposure to China, and rising competition threaten Estée Lauder's sales growth, market share, and margin stability.

Read the complete narrative.

Curious about why the narrative is banking on a strong rebound in margins and ambitious international expansion for this luxury titan? Dig deeper to discover which financial leaps underpin this valuation and what it would take for future earnings to keep up with soaring expectations.

Result: Fair Value of $95.09 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing travel retail weakness or persistent headwinds in China could quickly upend analyst optimism and challenge Estée Lauder’s rebound narrative.

Find out about the key risks to this Estée Lauder Companies narrative.

Story Continues

Another View: SWS DCF Model Sees Undervaluation

While the most popular narrative sees Estée Lauder as slightly overvalued, our DCF model offers a different perspective. It estimates fair value at $116.67, which is about 15% above the current share price. This signals potential upside the market may be overlooking. But can this gap really close as profits recover, or is the optimism baked into the model too ambitious?

Look into how the SWS DCF model arrives at its fair value.EL Discounted Cash Flow as at Oct 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Estée Lauder Companies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Estée Lauder Companies Narrative

If these perspectives don’t match your own or you want to weigh the data firsthand, you can shape your personal thesis in just a few minutes. Do it your way.

A great starting point for your Estée Lauder Companies research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include EL.

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