Revenue Recovery
Net sales grew 5.6% YoY to $4.23B in Q2 FY2026 (vs. $4.00B in Q2 FY2025), signaling a meaningful recovery in consumer demand for prestige beauty products after a challenging prior-year period.
Source: 10-Q Income Statement
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Estée Lauder Companies (EL) delivered a strong Q2 FY2026 turnaround, with revenue rising 5.6% YoY to $4.23B and operating income swinging to $401M from a prior-year loss of $580M, driven by gross margin expansion and disciplined SG&A control.
Revenue
$4.23B
+5.62% YoY
EPS (Diluted)
$0.44
+126.83% YoY
Gross Margin
76.5%
+0.4 pts YoY
Operating Income
$401M
+169.14% YoY
Source: SEC XBRL
Estee Lauder (EL) reported Q2 FY2026 revenue of $4.23B, up 5.6% year over year. Operating margin was 9.5%, against -14.5% a year earlier. EL's fiscal Q2 FY2026 corresponds to calendar Q4 2025.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Dec 2026 | 0.39 | 0.33 | Beat +18.4% |
| Mar 2026 | 0.91 | 0.67 | Beat +36.2% |
| Dec 2025This filing | 0.89 | 0.86 | Beat +3.4% |
| Sep 2025 | 0.32 | 0.18 | Beat +75.9% |
Adjusted (non-GAAP) EPS of $0.89 versus the $0.86 analyst consensus — a +3.4% beat for Dec 2025. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $0.44.
Compiled by AI from this SEC filing
Net sales grew 5.6% YoY to $4.23B in Q2 FY2026 (vs. $4.00B in Q2 FY2025), signaling a meaningful recovery in consumer demand for prestige beauty products after a challenging prior-year period.
Source: 10-Q Income Statement
Operating income surged to $401M from a loss of $580M in the prior year, a YoY improvement of approximately $981M (+169.1%), reflecting both revenue growth and significant reduction in restructuring or impairment charges that weighed on the prior period.
Source: 10-Q Income Statement
Gross margin improved modestly to 76.5% from 76.1% YoY, demonstrating that the company maintained pricing power and cost-of-goods discipline even as revenue scaled, with Cost of Revenue growing only 3.9% vs. revenue growth of 5.6%.
Source: 10-Q Income Statement / Key Ratios
SG&A expenses rose only 1.6% YoY to $2.63B despite a 5.6% revenue increase, indicating meaningful operating leverage and cost discipline that contributed to the operating margin expansion from -14.5% to +9.5%.
Source: 10-Q Income Statement
Fiscal year-to-date operating cash flow more than doubled to $785M (vs. $387M in the prior-year YTD period), reflecting improved profitability and working capital management, while investing outflows narrowed to -$208M from -$294M.
Source: 10-Q Cash Flow Statement
Compiled by AI from this SEC filing · 2 high, 3 medium, 0 low
SG&A expenses remain very high at $2.63B, representing approximately 62% of revenue, leaving limited room for error if revenue growth slows. Any demand softness could quickly erode the operating margin that was only recently restored to positive territory.
Source: 10-Q Income Statement
Despite the dramatic operating income turnaround, net margin stands at only 3.8%, suggesting significant below-the-line costs such as interest expense, taxes, or non-operating items are absorbing a large portion of operating profit. This leaves net income vulnerable to interest rate changes or tax adjustments.
Source: 10-Q Income Statement / Key Ratios
Stockholders' equity declined 3.3% YoY to $4.03B, and ROE stands at only 4.0%, indicating that the company is not yet generating returns commensurate with its equity base. Continued equity erosion could signal ongoing retained earnings deficits.
Source: 10-Q Balance Sheet / Key Ratios
Total assets declined slightly to $19.63B while current liabilities grew 4.8% to $5.27B, compressing the current ratio to 1.36. While still above 1.0, the tightening liquidity cushion warrants monitoring, especially given the company's large debt load implied by the asset-to-equity gap.
Source: 10-Q Balance Sheet / Key Ratios
The prior-year Q2 FY2025 operating loss of $580M and net loss of $590M suggest the company took large impairment or restructuring charges. If underlying business conditions that triggered those charges have not fully resolved, similar charges could recur and disrupt the current recovery trajectory.
Source: 10-Q Income Statement (YoY comparison)
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 4.23 $B | 4.00 $B | +5.62% |
Cost of Revenue $M | 994.00 $M | 957.00 $M | +3.87% |
Gross Profit $B | 3.24 $B | 3.05 $B | +6.17% |
Operating Income $M | 401.00 $M | -580.00 $M | +169.14% |
Net Income $M | 162.00 $M | -590.00 $M | +127.46% |
EPS (Basic) $ | 0.45 $ | -1.64 $ | +127.44% |
EPS (Diluted) $ | 0.44 $ | -1.64 $ | +126.83% |
SG&A Expense $B | 2.63 $B | 2.59 $B | +1.62% |
Answers draw on this SEC filing and the data on this page
EL (Estée Lauder) posted Q3 FY2026 revenue of $3.71B (+4.6% YoY) but net income fell 44% to $89M as higher operating costs and elevated SG&A compressed margins significantly.
Estée Lauder returned to net income of $182 million in FY2026 on 5% revenue growth and gross margin expansion, while flagging tariff and market uncertainties.
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