Estee Lauder vs. Revlon: Which Cosmetics Stock is a Better Buy?

Cosmetics stocks are likely to move higher in the quarters ahead simply because we appear to be in the final chapter of the pandemic. Consumers will ramp up spending on makeup and related items to look their best in public. Cosmetics plays are also particularly intriguing as social norms continue to evolve. Cosmetics are now purchased by both men and women, meaning the aggregate revenue pie is expanding that much more.
 
Estee Lauder (EL) and Revlon (REV) are two of the top cosmetics stocks. Here is a quick look at each of these cosmetics powerhouses that will help investors make the right selection.
 
EL

EL is an industry pioneer. The company’s makeup, skincare, haircare, and fragrance products are sold in more than 150 countries. Examples of EL product lines include Estee Lauder, Clinique, Tommy Hilfiger, Donna Karan New York, and Aveda.

EL has a forward P/E ratio of 45.96. This is an elevated ratio, especially when you consider EL is a cosmetics business without the same level of growth potential as a tech stock. EL has a beta of 0.95 so it is likely to hold steady if the market makes a significant move. EL is currently priced about $14 below its 52-week high of $336.56. EL has a 52-week low of $194.14.

EL is a POWR Ratings success with a B grade that indicates it is a Buy. EL has an A Quality component grade along with Bs in the Sentiment and Growth components. investors can find out how EL fares in the remainder of the POWR Ratings components such as Momentum, Value, and Stability by clicking here.

Out of the 65 stocks in the Fashion & Luxury segment, EL is ranked 34th. You can find out more about the stocks that comprise this segment by clicking here.

The analysts believe EL is underpriced. The average analyst price target for the stock is $341.13. If EL hits this price target, it will have popped by slightly more than 4%. The highest analyst price target for the stock is $384.

REV

REV makes cosmetics, personal care items, fragrances, and skincare products. Examples of REV’s product lines include Revlon, Ultima II, Jeanne Gatineau, Fire & Ice, and Jean Nate.

REV has a beta of 2.84, meaning it is likely to make a major move in unison with a volatile market. The stock is currently priced at $10.88. REV has a 52-week high of $19. The stock has a 52-week low of $2.96.

REV has a C POWR Rating grade. The stock has Ds in the Sentiment and Momentum components. REV has Cs in the Stability and Growth components. Investors who are curious as to how REV grades out in the rest of the POWR Ratings components such as Quality and Value can find out by clicking here.

Of the 65 stocks in the Fashion & Luxury category, REV is ranked in the bottom third at 51st overall. This segment as a whole has an A POWR Rating grade. You can find out more about the stocks in this category by clicking here.

The analysts are not exactly passionately pounding the table in support of REV. Only one analyst has provided a price target. The analyst expects REV to end up at $11, meaning it might be poised for a 4% decline. The stock's average price target has decreased by $1 across the prior three months. Furthermore, the analyst who has issued a price target insists the stock is not strong enough to qualify as a Buy. Rather, the broker recommendation for REV is a Hold.

Which is the Better Buy?

Even if you use REV products or know someone who does, do not let that exposure to the company’s products shape your investing decisions. EL is clearly the better of these two stocks as evidenced by its B POWR Rating grade. Add EL to your portfolio and don’t look back.