elf Beauty Inc. (ELF)

Investors are confused or worried over tariffs on China, but if the Supreme Court strikes down Trump's tariffs, this will jump 25 points. Hold on for now. Good CEO.

Faces tariffs and short-sellers. Many problems.

Bought Hailey Bieber's company for $1B -- a good acquisition, but changes the brand a bit.  Targeting millennials and Gen-Z. Still at a lower price point. Growth is quite good, valuation is a little up there. Interesting part is that average price point is $6.50, and they plan to raise it by $1. To a consumer it's only $1, but that's almost 15.5%. 

Company says tariff impact will be only $50M on an $8B company. Investors are re-examining it. Still relatively small, but could have 30-50% growth over next couple of years, and that will get noticed. No dividend.

It reports Wednesday. Has a lot of room to grow. Expects a good quarter.

China makes their stuff, which is how they undercut their competitors in price. It's up in the air--we don't the tariffs they will pay.

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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Is not comfortable that company sources its products from China at this time, given Trump's new tariffs.

He's long liked this growth story in consumer products. They didn't raise guidance enough, so shares plunged 14%.

Shares are down because they are heavily shorted, Estee Lauder and Ulta have been weak too. ELF is the best in a weak sector.

ELF is trading at 42.7x Forward P/E, and the growth over the next few years is expected to be solid, above 15%. In the last five years, ELF’s valuation has ranged from a 26.5x forward P/E to as high as 52.7x. We think the current valuation is fair, but we would not consider it to be an aggressive buy yet.
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One of the most-shortest stocks; anything bad that happens in the cosmetics group and this gets punished. Buy in the first 14 points down or wait till Thursday.

Low cost makeup provider. Success in copying popular brands and selling on Tiktok/eCommerce. Questions on sharp rise in performance (very competitive in retail space), and whether it is sustainable. Cheap knock off products are difficult to sustain. Unsure on future of business. 

A quality growth name. Take profits if this doubles, then take more profits if it doubles again. He prefers to hold onto great growth companies.

#1 in cosmetics, getting stronger in this ranking.  ELF is a long-time favourite of his.

Discount makeup brand. Moving well, #3 in the US. Market share hovering around 10%. Makeup sales tend to hold up in a recession. Usually beats on earnings. Target price of $145, so potentially 20% upside. Growth in earnings and sales. Raised guidance. A meaningful opportunity. Likes the business model.