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E.l.f. Beauty (ELF - Free Report) stock soared in 2022 as the low-priced makeup seller attracts more customers than ever amid 40-year high inflation. E.l.f. Beauty has crushed quarterly earnings estimates and continued to raise its outlook, which is no easy task amid the current economic environment.
E.l.f. Beauty is also standing out in the wider cosmetics industry that is benefiting from a return to normal life and a well-established trend known as the lipstick effect during economic downturns.
Beauty is Booming
E.l.f. Beauty started in 2004. The firm quickly began to shake up the industry by selling premium cosmetics for $1 over the internet. A lot has changed since then and the brand caught on as the digital economy boomed. Many consumers are also always looking for high quality at a lower cost in an industry full of huge marks ups and sky-high costs. ELF then went public in 2016.
E.l.f. Beauty, which stands for eyes, lips and face, stands out in a crowded space by selling its cosmetic offerings for much lower prices than high-end competitors. The company’s brands include e.l.f., e.l.f. Skin, Well People, and Keys Soulcare.
E.l.f. Beauty’s revenue climbed 6% during the heart of the pandemic in its fiscal 2020 and began to really climb during the last several years as people returned to their normal lives.
E.l.f. Beauty’s executive team has navigated inflation better than most. The firm has kept some of its price points nearly unchanged, while raising its prices on many items and introducing higher-end products to help margins as companies around the economy saw their profits crunched. E.l.f. Beauty’s quality-meets-low-cost approach is now more attractive than ever.
Image Source: Zacks Investment Research
Recent Strength & Outlook
The firm destroyed our adjusted Q2 FY23 earnings estimates on November 2 by 125%, for its seventh straight beat. E.l.f. Beauty posted its 15th straight quarter of revenue growth as well, and, most importantly, it raised its guidance for its fiscal 2023 as the overall outlook for S&P 500 earnings fades.
The firm also said that it gained 115 basis points of market share during the period. On top of that, e.l.f. Beauty’s gross margin increased by 1.9% to 65% last quarter. The boosted margins were primarily driven by “price increases, cost savings and product mix, partially offset by inventory adjustments and higher transportation costs.”
ELF’s adjusted earnings outlook has skyrocketed for FY23 and FY24, as the nearby chart showcases. Zacks estimates call for e.l.f. Beauty’s fiscal 2023 revenue to climb 25% to $488.9 million and then jump another 12% in FY24 to $544.9 million. This growth would come on top of 23% sales expansion in ELF’s FY22 and 13% in FY21.
E.l.f. Beauty’s adjusted earnings are projected to climb by 33% in its fiscal 2023 to $1.12 per share and then pop by an additional 11% in FY24. Plus, ELF has topped our EPS estimates by an average of 93% in the trailing four periods and its most recent EPS estimate for FY24 comes in 9% higher than the current consensus.
Image Source: Zacks Investment Research
Other Fundamentals
E.l.f. Beauty is part of the Cosmetics industry that currently ranks in the top 14% of over 250 Zacks industries. The group includes Coty (COTY), L'Oréal S.A. (LRLCY), and others. It is worth noting that studies have shown that 50% of a stock's price movement can be attributed to its industry. The Zacks Cosmetics industry has climbed 11% in the last three months, with ELF shares up 45%.
ELF’s recent run is part of a 78% climb over the last 12 months vs. the S&P 500’s 19% fall. The stock has also soared 260% in the last three years vs. the larger Zacks Consumer Staples Market’s 1% and the S&P 500’s 19%.
E.l.f. Beauty hit fresh highs of $57 per share on January 4. Some investors might be nervous about buying at new highs. But ELF’s ability to climb as large swaths of the market continue to tumble is highly impressive. And sticking with what has already worked during the economic uncertainty could serve investors well in 2023.
E.l.f. Beauty’s valuation levels might be a bit high for many investors, especially for a makeup company during a rising earnings environment. But ELF is still trading 25% below its own three-year highs and right at its median during this stretch. And it sits near neutral levels in terms of the relative strength index (RSI).
ELF also sports a strong balance sheet and 10 of the 13 brokerage recommendations Zacks has are “Strong Buys” or “Buys,” with no “Sells.” On top of that, there is an established phenomenon known as the lipstick effect that showcases a willingness for consumers to buy small, fun things when people can’t splurge on big-ticket items.
Image Source: Zacks Investment Research
Bottom Line
E.l.f. Beauty’s strong earnings estimate revisions help it land a Zacks Rank #1 (Strong Buy) at the moment. Positive earnings revisions are always helpful indicators of companies heading in the right direction. The current economic and market environment makes ELF and other stocks with strong growth outlooks and improving earnings estimates even more attractive.
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Bull of the Day: e.l.f. Beauty (ELF)
E.l.f. Beauty (ELF - Free Report) stock soared in 2022 as the low-priced makeup seller attracts more customers than ever amid 40-year high inflation. E.l.f. Beauty has crushed quarterly earnings estimates and continued to raise its outlook, which is no easy task amid the current economic environment.
E.l.f. Beauty is also standing out in the wider cosmetics industry that is benefiting from a return to normal life and a well-established trend known as the lipstick effect during economic downturns.
Beauty is Booming
E.l.f. Beauty started in 2004. The firm quickly began to shake up the industry by selling premium cosmetics for $1 over the internet. A lot has changed since then and the brand caught on as the digital economy boomed. Many consumers are also always looking for high quality at a lower cost in an industry full of huge marks ups and sky-high costs. ELF then went public in 2016.
E.l.f. Beauty, which stands for eyes, lips and face, stands out in a crowded space by selling its cosmetic offerings for much lower prices than high-end competitors. The company’s brands include e.l.f., e.l.f. Skin, Well People, and Keys Soulcare.
E.l.f. Beauty’s revenue climbed 6% during the heart of the pandemic in its fiscal 2020 and began to really climb during the last several years as people returned to their normal lives.
E.l.f. Beauty’s executive team has navigated inflation better than most. The firm has kept some of its price points nearly unchanged, while raising its prices on many items and introducing higher-end products to help margins as companies around the economy saw their profits crunched. E.l.f. Beauty’s quality-meets-low-cost approach is now more attractive than ever.
Image Source: Zacks Investment Research
Recent Strength & Outlook
The firm destroyed our adjusted Q2 FY23 earnings estimates on November 2 by 125%, for its seventh straight beat. E.l.f. Beauty posted its 15th straight quarter of revenue growth as well, and, most importantly, it raised its guidance for its fiscal 2023 as the overall outlook for S&P 500 earnings fades.
The firm also said that it gained 115 basis points of market share during the period. On top of that, e.l.f. Beauty’s gross margin increased by 1.9% to 65% last quarter. The boosted margins were primarily driven by “price increases, cost savings and product mix, partially offset by inventory adjustments and higher transportation costs.”
ELF’s adjusted earnings outlook has skyrocketed for FY23 and FY24, as the nearby chart showcases. Zacks estimates call for e.l.f. Beauty’s fiscal 2023 revenue to climb 25% to $488.9 million and then jump another 12% in FY24 to $544.9 million. This growth would come on top of 23% sales expansion in ELF’s FY22 and 13% in FY21.
E.l.f. Beauty’s adjusted earnings are projected to climb by 33% in its fiscal 2023 to $1.12 per share and then pop by an additional 11% in FY24. Plus, ELF has topped our EPS estimates by an average of 93% in the trailing four periods and its most recent EPS estimate for FY24 comes in 9% higher than the current consensus.
Image Source: Zacks Investment Research
Other Fundamentals
E.l.f. Beauty is part of the Cosmetics industry that currently ranks in the top 14% of over 250 Zacks industries. The group includes Coty (COTY), L'Oréal S.A. (LRLCY), and others. It is worth noting that studies have shown that 50% of a stock's price movement can be attributed to its industry. The Zacks Cosmetics industry has climbed 11% in the last three months, with ELF shares up 45%.
ELF’s recent run is part of a 78% climb over the last 12 months vs. the S&P 500’s 19% fall. The stock has also soared 260% in the last three years vs. the larger Zacks Consumer Staples Market’s 1% and the S&P 500’s 19%.
E.l.f. Beauty hit fresh highs of $57 per share on January 4. Some investors might be nervous about buying at new highs. But ELF’s ability to climb as large swaths of the market continue to tumble is highly impressive. And sticking with what has already worked during the economic uncertainty could serve investors well in 2023.
E.l.f. Beauty’s valuation levels might be a bit high for many investors, especially for a makeup company during a rising earnings environment. But ELF is still trading 25% below its own three-year highs and right at its median during this stretch. And it sits near neutral levels in terms of the relative strength index (RSI).
ELF also sports a strong balance sheet and 10 of the 13 brokerage recommendations Zacks has are “Strong Buys” or “Buys,” with no “Sells.” On top of that, there is an established phenomenon known as the lipstick effect that showcases a willingness for consumers to buy small, fun things when people can’t splurge on big-ticket items.
Image Source: Zacks Investment Research
Bottom Line
E.l.f. Beauty’s strong earnings estimate revisions help it land a Zacks Rank #1 (Strong Buy) at the moment. Positive earnings revisions are always helpful indicators of companies heading in the right direction. The current economic and market environment makes ELF and other stocks with strong growth outlooks and improving earnings estimates even more attractive.