Estee Lauder’s earnings decline is a buying opportunity
CNBC’s Jim Cramer said on Thursday he viewed the fall in Estee Lauder shares after the earnings as a buying opportunity and downplayed concerns about the company’s sales in the Asia Pacific region.
“When China ends its lockdowns, I think the demand for these products will increase,” said the Mad Money host. “That’s why the stock is on [Estee Lauder] is a purchase, not a sale.”
The cosmetics giant beat Wall Street expectations on both revenue and earnings, posting 11% organic sales growth and 14% overall sales growth in the fiscal second quarter. While Cramer said he was impressed with the results, shares of Estée Lauder fell 5% in Thursday’s session.
“A lot is because analysts are now concerned that China is slowing down,” Cramer said, calling the concern “absurd.”
Estee Lauder reported 5% organic net sales growth in its Asia Pacific region, but Cramer said it was necessary to interpret those results in the context of the strict restrictions imposed by the Covid pandemic in China.
“What matters is Chinese demand. … The supply is not the problem here,” said Cramer. “What we do know is that Chinese consumers did just that when they could buy Estee Lauder when stores were open.”
Cramer’s Charitable Foundation does not currently own Estee Lauder. On December 16, the trust exited its 100-share position, selling them for approximately $365.67 a share. It had bought shares earlier in the summer, believing Estee Lauder was a solid way to play the pandemic reopening.
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