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e.l.f. Beauty
ELF-N
WATCH
Feb 07, 2025
$71.130
Stock price when the opinion was issued
Consumer Products
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BUY
Company enjoying tailwinds with demand for beauty products. Viral marketing and middle of the road pricing very good for business. Management increasing earnings estimates. Consensus is for $140 stock price. Seeing meaningful upside in stock. Demand for beauty products not slowing, even if recession occurs.
Consumer Products
EPS of 74c missed estimates of 77c. Revenue of $355M beat estimates of $331M. EBITDA of $68M missed estimates by 7%. E.L.F. Beauty's slightly reduced sales outlook for fiscal 2025 reflects softer-than-expected January demand, demonstrating that the cosmetics and skin-care maker isn't immune to broader trends. The midpoint of guidance is still 5% above initial projections, as sales proved better than anticipated through 3Q, despite tough comparisons. The revised projection of $1.30-$1.31 billion in annual sales suggests a deceleration in growth to 27-28% for 2025, a three-year low. Slowing could extend into 2026 as consumers remain selective and beauty demand has yet to rebound, though store and shelf-expansion may provide an offset. Ebitda margin appears poised to be flat to slightly lower vs. fiscal 2024. Increased tariffs on imports from China could add pressure in 2026. The key word here is 'deceleration'. That, combined 26X earnings valuation and with negative stock momentum, compels us to sit this one out for a while.
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