Is The Estée Lauder Companies, Inc. overvalued or undervalued?

As of 4 February 2025, the valuation grade for The Estée Lauder Companies, Inc. has moved from expensive to risky, indicating a shift in perception regarding its valuation. The company appears to be overvalued based on its current metrics, with a P/E ratio of 40, a Price to Book Value of 9.30, and an EV to EBITDA of 22.66. In comparison, peers such as Kimberly-Clark Corp. have a P/E of 19.95 and Church & Dwight Co., Inc. shows an EV to EBITDA of 22.51, highlighting the relative overvaluation of Estée Lauder.
The company's recent stock performance reflects its challenges, with a year-to-date return of 17.36% compared to the S&P 500's 12.22%. However, over longer periods, such as 3 years and 5 years, Estée Lauder has significantly underperformed the benchmark, with returns of -63.24% and -58.57%, respectively. This underperformance reinforces the notion that the stock is currently overvalued.