Bull of the Day: e.l.f. Beauty (ELF)

e.l.f. Beauty, Inc. ELF is operating on all cylinders as consumers are still buying beauty. This Zacks Rank #1 (Strong Buy) just beat on earnings for the eighth quarter in a row.  

e.l.f. Beauty is a beauty company with multiple brands including e.l.f. Cosmetics, e.l.f. SKIN, clean beauty brand Well People and Keys Soulcare, a lifestyle beauty brand created with Alicia Keys.

It sells online and across leading beauty retailers in the United States. The company also has a growing international presence.

Another Big Beat in Fiscal Q3

On Feb 1, 2023, e.l.f. Beauty reported its fiscal third quarter 2023 results and blew by the Zacks Consensus for the 8th quarter in a row.

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Earnings were $0.48 versus the Zacks Consensus of just $0.23, for a 108.7% beat.

Net sales jumped 49% to $146.5 million, due to strength in both retailer and e-commerce channels. It was the 16th consecutive quarter of net sales growth.

Gross margin rose 180 basis points to 67%, primarily driven by price increases, cost savings and product mix, partially offset by inventory adjustments and costs related to space gains and Spring shelf resets.

e.l.f. Beauty has improved its balance sheet over the last year.

As of Dec 31, 2022, it had $87 million in cash and cash equivalents, up from$32.9 million a year ago. It also had $62.2 million in long-term debt and finance lease obligations at the end of the year, down from $92.5 million as of Dec 31, 2021.

e.l.f. Beauty Raised Full Year Guidance

With the big earnings beat and sales jumping higher, the company raised full year guidance. Net sales are now expected to rise 38% to 39% year-over-year, up from prior guidance of 22%-24% growth.

That's a revenue range of $541-$545 million up from $478-$486 million.

Earnings are now expected to be in the range of $1.37 to $1.40 up from previous guidance of $1.07 to $1.10.

That is higher than the current Zacks Consensus which just moved up to $1.13 from $1.12 in the last week. But look for further analyst adjustments higher. That's earnings growth over 34% as the company made just $0.84 last year.

Stock Soars on Another Earnings Beat

Shares of e.l.f. Beauty have been on a tear the last 6 months, gaining 99% during that time. They jumped 15% on the big third quarter earnings beat alone.

The stock is at 5-year highs.

But earnings are also moving in the right direction, which is up.

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Zacks Investment Research

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However, you're going to pay the price if you're jumping in here. It's not a cheap stock. e.l.f. Beauty has a forward P/E of 52.

Beauty has been one of the hot industries on the reopen and it still has momentum. For those looking for a top ranked beauty company that is still posting big beats, and raising full year guidance, then e.l.f. Beauty is the one for your short list.

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