Estee Lauder Companies Inc (NYSE:EL) recently released earnings, which were welcomed by investors and managed to push the stock to new highs, only for prices to subsequently consolidate into its prior price range just below $64. In this state, the stock is likely off the radar of many, but this is also great time to be looking at it from an investment stand point.

What's to Like?

While a slowdown in the global growth of the beauty product sector had an overall impact, pockets of strength exist. Emerging markets have been the star in the portfolio; sales there were up 24% for the quarter and accounted for 40% of its total business.  China was the largest emerging market; sales were up 28% and helped garner larger market share in the country.  Interestingly, the company sells more (value wise) to Chinese people out of China than within. The Chinese market runs at between 7 and 8 million women (mostly). The Asia/Pacific region has achieved compound sales growth of 15% over the past 5 years, with net sales of $2 billion in 2012.  In addition, North American sales of luxury brands, like Jo Malone, were up 20%, with sales in top-end department stores beating out mid-tier store sales. The company opened 42 new M-A-C stores, of which its flagship Fifth Avenue store has surpassed its Times Square store. U.K. sales were robust for Jo Malone and M-A-C brands.  In France, brand growth of its skin care and makeup categories outpaced its competitors.

The Figures

The company reported EPS of $1.13 compared to $1 from a year ago.  The company typically edges analyst estimates, but for Q2 it came in solidly ahead, which was another reason for optimism. The company affirmed top line local currency growth of 6%-7% for full fiscal year.  The full year earnings per share forecast was increased to between $2.51 and $2.59.

The Competitors

Avon Products, Inc. (NYSE:AVP) pulled a rabbit out of its hat as it recently reported a better than expected fourth quarter, beating estimates by $0.10 to come in at $0.37.  This popped the share price to new highs, with 30 million+ shares traded (over four times average volume).  But the earnings beat came at the expense of a 1% drop in revenue, which makes it tough to sustain a consistent level of earnings growth.

As with Estee Lauder Companies Inc (NYSE:EL), it was emerging markets that did the heavy lifting;  Avon's Brazilian sales were up 10%, and Russian sales were up 3%. However, China is a big miss for Avon. A mixed retail message hurt performance in a region that has seen stellar sales for Estee Lauder.  Distribution woes turned Russia into a problem child for Estee Lauder, and perhaps gave Avon an easier ride in the country.  But this could quickly change, particularly as Russians tend to favour the luxury end of the scale.  Avon announced it was existing the Korean and Vietnam markets to save money.  Again, Korea was a problem for Estee Lauder with falling sales.  But Estee Lauder remained committed to Korea, and were "cautiously optimistic" on a rebound.  Given the Avon experience, Korea will likely be a chronic drag on the company, so it may end up that Estee Lauder will follow Avon out the exit door.