The Estée Lauder Companies (NYSE:EL) and Reckitt Benckiser Group (OTCMKTS:RBGLY) are both large-cap consumer staples companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.
Institutional & Insider Ownership
55.0% of The Estée Lauder Companies shares are owned by institutional investors. Comparatively, 0.3% of Reckitt Benckiser Group shares are owned by institutional investors. 14.0% of The Estée Lauder Companies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of current recommendations and price targets for The Estée Lauder Companies and Reckitt Benckiser Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Estée Lauder Companies | 0 | 5 | 14 | 0 | 2.74 |
| Reckitt Benckiser Group | 1 | 5 | 7 | 0 | 2.46 |
The Estée Lauder Companies currently has a consensus price target of $273.9524, indicating a potential downside of 4.17%. Given The Estée Lauder Companies' stronger consensus rating and higher probable upside, analysts plainly believe The Estée Lauder Companies is more favorable than Reckitt Benckiser Group.
Earnings & Valuation
This table compares The Estée Lauder Companies and Reckitt Benckiser Group's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Estée Lauder Companies | $14.29 billion | 7.25 | $684 million | $4.12 | 69.38 |
| Reckitt Benckiser Group | $16.55 billion | 3.68 | $-4,702,820,000.00 | $0.90 | 19.01 |
The Estée Lauder Companies has higher earnings, but lower revenue than Reckitt Benckiser Group. Reckitt Benckiser Group is trading at a lower price-to-earnings ratio than The Estée Lauder Companies, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares The Estée Lauder Companies and Reckitt Benckiser Group's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Estée Lauder Companies | 4.38% | 32.72% | 7.91% |
| Reckitt Benckiser Group | N/A | N/A | N/A |
Volatility and Risk
The Estée Lauder Companies has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, Reckitt Benckiser Group has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.
Dividends
The Estée Lauder Companies pays an annual dividend of $2.12 per share and has a dividend yield of 0.7%. Reckitt Benckiser Group pays an annual dividend of $0.34 per share and has a dividend yield of 2.0%. The Estée Lauder Companies pays out 51.5% of its earnings in the form of a dividend. Reckitt Benckiser Group pays out 37.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Estée Lauder Companies has increased its dividend for 8 consecutive years. Reckitt Benckiser Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
The Estée Lauder Companies beats Reckitt Benckiser Group on 14 of the 17 factors compared between the two stocks.
