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Michael Bur, the investor who is famous for predicting the 2008 real estate crash, recently released what his new portfolio looks like in his 13F. And as you can see, he sold every single stock that he owned besides for Estee Lauder. So, in this video, I'm going to do a quick SA Lauder stock analysis.
So, taking a quick look at SA Lauder, you can see that they currently have a $24 billion market cap, but the stock is down 67% over the past 5 years. Looking at their financials, you can see pretty easily why they're down so much. And that's because their revenue and their income has been going down massively.
Uh, you know, they had their highest revenue in 2022, and since then it's dropped from 17.7 billion down to 15.6 billion. Um, at the same time, you can see their total net income was 871 million in the last 12 months, which is also down again from in 2021, uh, $2.8 8 billion in profit. One, they have a pretty strong balance sheet with a total of $7 billion in current assets and $19.8 billion in total assets compared to $15 million $15 billion, sorry, in total liabilities and 5 billion in total current liabilities.
So, they have enough to pay off all their debt currently and they should be okay, you know, assuming they're able to continue generating cash. But now looking at their cash flow statement, you can see it's it's actually not as bad as what the income statement makes it look like. Mainly because they had an asset write down of $1.3 billion uh in the last 12 months, which made the uh net income look worse.
So in their cash from operations they actually did taking out uh changes in networking capital they did 1.1 billion which is pretty good but you know they still have massive capital expenditures you know 600 million and they have a huge amount of stockbased compensation. So they basically negates all the cash they earn from operations.
Um they've also been repaying uh their debt but they've been paying so much in dividends that they end up with a big negative in changing cash. So, in the past 12 months, they're down $1 billion in cash. But I don't think the current financials is why Michael Bur is interested. I think it's a lot more likely because of their new plan.
They recently got a new CEO and what he announced is they're making a new thing called Beauty Reimagined or they're not making it, it's a new plan. And the plan is basically to just cut cost. They're going to decrease all the costs and increase advertising and marketing. You know, try to increase their sales.
uh stop the um you know stop the uh you know negative growth and they announced that they'll cut up to 7,000 jobs and the goal is to create savings of between 800 million and $1 billion. Um this is obviously massive and if they can do that that would be huge for the company and they would be making uh a lot more and they'd be a lot more profitable.
Uh now my concern is while cutting cost is great and all they have been getting crushed in their sales. You know looking at their most recent earnings you can see skincare sales decreased by 11% makeup decreased by 7. Uh fragrances barely decreased but it still decreased you know it didn't increase and hair care decreased by 10%.
So their sales are going down massively. Spending more in advertising and marketing could help but that's also once again going to raise costs. Um and so I would assume this is why Michael Bur is interested just because if they really can save 800 million in um savings then they will be trading let's just say if they can save 800 million uh that could make them profitable and you know assuming that the past the last couple months were you know just way worse than normal and assuming they go back let's say in 2024 they did 400 million they would be making 1.2 2 billion which would mean they would be trading at I don't know like 30 times uh earnings which isn't nearly as bad as you know obviously negative earnings.
Um, so that's why I think he's interested in it. But my concern is, but to me, I don't think it's as interesting, especially when they have competitors like ELF, for example, which don't just not have uh negative revenue growth, but they've had massive positive revenue growth like 12%, 23%, 47, 76, 28, and you know, that that that's that adds up quickly.
And obviously ELF is a much smaller competitor, but you know, why would I want to look at a company that has such decreasing uh earnings and revenue? And yeah, obviously ELF is more expensive, but why wouldn't it be more expensive? Um, you know, they're growing at a great pace. Um, so yeah, that's my super short uh analysis of Essay Lauder.
If there's if you want me to look more into it, let me know. Or if there's anything you think I missed, uh, make sure to let me know. But yeah, overall I think it's an interesting idea.
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