ELF

e.l.f. Beauty Stock (NYSE:ELF): Its Rapid Growth Isn’t Just Cosmetic

e.l.f. Beauty (NYSE:ELF) is a surprising standout this week, and the company’s impressive growth isn’t just surface-level or cosmetic. e.l.f. Beauty’s excellent financial performance is real and undeniable, and the company’s forward guidance should reassure reluctant shareholders. Therefore, even after today’s huge share-price rally, I am still bullish on ELF stock.

e.l.f. Beauty is a cosmetics company with a “focus on clean, cruelty free and vegan products.” There’s a pretty good chance that you might have seen e.l.f. Beauty’s advertisements on social media.

The billion-dollar question is has e.l.f. Beauty been able to defeat the inflation monster and ramp up its sales this year? The answer is definitely yes, and e.l.f. Beauty apparently expects the consumer to remain resilient throughout Fiscal Year 2025. So, let’s see why there’s a strong bullish argument to consider buying ELF stock, even after the recent vertical share-price move.

ELF Stock Heads Toward $200 on Impressive Results

e.l.f. Beauty stock ran almost 20% higher today and headed toward $200 on unusually heavy trading volume. All of a sudden, e.l.f. Beauty was trending, even though it’s usually not a hot topic of conversation. The catalyst was e.l.f. Beauty’s fourth-quarter Fiscal Year 2024 results and Fiscal Year 2025 guidance. However, even prior to the data release, some analysts seemed to sense that e.l.f. Beauty would deliver impressive results.

For example, according to TheFly, Canaccord analyst Susan Anderson previewed e.l.f. Beauty’s fourth-quarter results and remained bullish on ELF stock “due to continued strong demand across the entire portfolio.” However, the Canaccord analyst expected e.l.f. Beauty to “guide typically conservative with the top line potentially in the teens range” – but we’ll get to that topic in a moment. In any case, Canaccord reiterated its Buy rating as well as its $214 price target on e.l.f. Beauty stock.

Meanwhile, Piper Sandler analyst Korinne Wolfmeyer assigned an Overweight rating and a $216 price target to e.l.f. Beauty shares prior to the quarterly data release. On the other hand, Wolfmeyer expressed concerns that a “lighter than hoped for outlook… could limit share appreciation in the very near-term.” As we’ll see, though, there’s no need to worry too much about that.

In contrast, Stifel analysts published a Hold rating and a $151 price target on ELF stock. Nevertheless, Stifel seemed fairly optimistic as the firm saw “upside to consensus sales expectations for Q4” and viewed Fiscal Year 2025 estimates as “‘reasonable’ based on a deep dive of e.l.f.’s sales by segment.”

As it turns out, the more optimistic analysts were spot-on, as e.l.f. Beauty’s fourth-quarter 2024 net revenue rocketed 71% higher year-over-year to $321.1 million. This result easily surpassed the consensus estimate of $293.2 million in quarterly revenue.

e.l.f. Beauty Looks Forward to a Strong 2025

While e.l.f. Beauty’s revenue ramp-up is undeniable, there’s more to e.l.f. Beauty’s growth story than that. In particular, the company’s Q4-FY2024 adjusted earnings of $0.53 per share was 25% higher than the year-earlier quarter’s result of $0.42 per share. Furthermore, this result easily beat Wall Street’s consensus call for earnings of $0.33 per share. The real kicker, though, was e.l.f. Beauty’s guidance for 2025.

Despite persistent inflation, e.l.f. Beauty’s outlook for Fiscal Year 2025 “reflects an expected 20-22% increase in net sales.” To be more specific, the company anticipates net revenue of $1.23 billion to $1.25 billion in FY2025 versus actual FY2024 net revenue of $1.024 billion.

Here’s where it gets really interesting. The consensus forecast called for e.l.f. Beauty to generate net sales of $1.27 billion in Fiscal Year 2025. By that measure, e.l.f. Beauty’s sales guidance might be called a “miss.”

Was it really a “miss,” though? Forward guidance implying a year-over-year sales increase of 20% to 22% is, in my opinion, optimistic. I’d say that the market agrees with me on this topic since ELF stock took a rocket ride today.

Is ELF Stock a Buy, According to Analysts?

On TipRanks, ELF comes in as a Strong Buy based on eight Buys and two Hold ratings assigned by analysts in the past three months. The average e.l.f. Beauty stock price target is $200.25, implying 8.4% upside potential.

If you’re wondering which analyst you should follow if you want to buy and sell ELF stock, the most accurate analyst covering the stock (on a one-year timeframe) is Olivia Tong of Raymond James, with an average return of 120.76% per rating and a 94% success rate. Click on the image below to learn more.

Conclusion: Should You Consider ELF Stock?

As we discussed, some analysts expressed their forecasts about whether e.l.f. Beauty’s full-year FY2025 guidance would be strong or soft. I’d say that it came in strong, even if e.l.f. Beauty’s sales outlook “missed” Wall Street’s estimate.

Just as importantly, e.l.f. Beauty posted excellent top-line and bottom-line results for FY2024’s fourth quarter. That’s a beautiful thing to witness during a time of “sticky” inflation, wouldn’t you agree? In light of all this, I’m optimistic about ELF stock and would consider buying it today.

Disclosure

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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