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Bull Of The Day: e.l.f. Beauty (ELF)

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e.l.f. Beauty (ELF - Free Report) is a Zacks Rank #1 (Strong Buy) and it sports an F for Value and an A for Growth.  I like it when I see the divergence in growth and value scores as it tells me that I am on the right path.  This is not a store for woodland creatures (but they do not discriminate against said elf’s) the e.l.f stands for Eyes, Lips and Face. Let’s explore more about this company in this Bull of The Day article.

Description

e.l.f. Beauty, Inc. operates as a cosmetic company. Its cosmetic category primarily consists of face makeup, eye makeup, lip products, nail products and cosmetics sets/kits, excludes beauty tools and accessories, such as brushes and applicators. e.l.f. Beauty, Inc. is based in Oakland, United States.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For ELF, I see four straight beats of the Zacks Consensus Estimate.  That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

The average positive earnings surprise over the course of the last year works out to be 77%.

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher. 

Over the last 60 days, earning estimates have moved up for ELF.

This quarter has held still at $0.14.

Next quarter has also held still at $0.20.

The full fiscal year 2022 has increased from $0.88 to $0.90

Next fiscal year has seen the estimate move from $0.97 to $0.99.

Positive movement in earnings stock is a Zacks Rank #1 (Strong Buy).

Valuation

The valuation for this name is somewhat high.  I see the forward earnings multiple works out to be 44x and that is a lot for a name that has posted topline growth of 26% in the most recent quarter.  Price to book comes in a 6.5x which is also a little high.

Margins have seen an increase over the last three quarters.  With revenue growing and margins expanding, EPS will continue to move higher.


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