## e.l.f. Beauty Stock Analysis: Is It Time to Invest?
e.l.f. Beauty has been generating buzz on Zacks.com recently, and it’s natural to wonder if the stock is worth adding to your portfolio. To make an informed decision, it’s important to delve into the factors that could influence its future performance.
Understanding the Stock’s Recent Performance
Over the past month, e.l.f. Beauty shares have declined by 1.9%, while the Zacks S&P 500 composite has risen by 2%. The cosmetics industry, which includes e.l.f. Beauty, has experienced a more significant drop, losing 11.2% during this period.
Earnings Estimates: A Key Indicator
At Zacks, we believe the most crucial factor in evaluating a stock’s fair value is its future earnings potential. We closely monitor how analysts are revising their earnings estimates to reflect recent business trends.
For e.l.f. Beauty, the consensus earnings estimate for the current quarter stands at $0.44 per share, representing a year-over-year decline of 46.3%. However, over the past 30 days, this estimate has decreased slightly by 1.3%.
Looking ahead, the consensus earnings estimate for the current fiscal year is $3.53, indicating a year-over-year increase of 11%. This estimate has seen a minor adjustment of -0.1% over the last 30 days. For the next fiscal year, the consensus estimate of $4.42 suggests a strong year-over-year growth of 25.3%.
The Importance of Revenue Growth
While earnings growth is a significant indicator of a company’s financial health, it’s crucial to consider revenue growth as well.
For e.l.f. Beauty, the consensus sales estimate for the current quarter is $291.03 million, representing a year-over-year increase of 35%. For the current and next fiscal years, the estimates are $1.32 billion and $1.56 billion, respectively, indicating growth of 29.2% and 17.9%.
Recent Performance and Surprise History
In the last reported quarter, e.l.f. Beauty reported revenues of $324.48 million, representing a year-over-year increase of 50%. EPS for the same period came in at $1.10, comparable to the previous year. The company exceeded the Zacks Consensus Estimate for revenues by 6.88% and for EPS by 32.53%.
It’s noteworthy that e.l.f. Beauty has consistently exceeded consensus EPS and revenue estimates over the trailing four quarters, demonstrating a track record of positive performance.
Valuation Matters
When evaluating a stock, valuation plays a critical role in determining its intrinsic value and whether its current price aligns with its growth prospects. Comparing a company’s valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its historical values and those of its peers can provide insights into whether its stock is fairly valued, overvalued, or undervalued.
The Zacks Value Style Score, a part of the Zacks Style Scores system, assesses traditional and unconventional valuation metrics to assign a grade ranging from A to F (A being the best). e.l.f. Beauty currently holds an F grade, indicating that it’s trading at a premium compared to its peers.
The Zacks Rank: A Key Indicator
Our proprietary stock rating tool, the Zacks Rank, leverages the power of earnings estimate revisions to provide a more comprehensive picture of a stock’s near-term price direction. Based on recent changes in the consensus estimate and other factors, e.l.f. Beauty is currently rated Zacks Rank #3 (Hold). This suggests that the stock may perform in line with the broader market in the near term.
Conclusion
While the information presented here and other data available on Zacks.com can help guide your investment decisions regarding e.l.f. Beauty, its Zacks Rank #3 indicates that it might perform similarly to the overall market in the short term. Ultimately, you should conduct thorough research and consider your own investment goals before making any investment decisions.
