Pressured e.l.f. Beauty Shares Have Growth Potential

ELF makes inclusive, accessible, clean, vegan, and cruelty-free skin products. The company created a niche by targeting younger customers with discount products, e-commerce, and social media. It also has a strong brick-and-mortar presence and growing international sales. ELF acquired a skincare company last year and is looking to grow more.

Shares hit record highs in the summer and its business is strong. From fiscal 2019 to fiscal 2024, e.l.f.’s revenue increased at a compound annual growth rate of 31%, and its annual gross margin rose 10% to 71%. Also, international sales grew by 91% year-over-year in the first quarter. But an underwhelming outlook for the rest of fiscal 2025 at its earnings announcement in August sent shares tumbling.

Now ELF shares are down 21% this year – but they could rise, thus proving a value opportunity. MAPsignals data shows how Big Money investors are betting heavily on the forward picture of the stock.

Big Money Interest in e.l.f.

Institutional volumes reveal plenty. ELF has enjoyed strong investor demand at some points in the last year, which we believe to be institutional support.

Each green bar signals unusually large volumes in ELF shares. They reflect our proprietary inflow signal, pushing the stock higher:

Plenty of staples names are under accumulation right now. But there’s a powerful fundamental story happening with e.l.f.

e.l.f. Fundamental Analysis

Institutional support and a healthy fundamental backdrop make this company worth investigating. As you can see, ELF has had strong sales and earnings growth:

• 3-year sales growth rate (+49.3%)
• 3-year earnings growth rate (+170.6%)

Source: FactSet

Also, EPS is estimated to ramp higher this year by +26.1%.

Now it makes sense why the stock has been powering to new heights. ELF has a track record of strong financial performance.

Marrying great fundamentals with our proprietary software has found some big winning stocks over the long term.

ELF has been a top-rated stock at MAPsignals. That means the stock has unusual buy pressure and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

It’s made the rare Top 20 report multiple times in the last couple years. The blue bars below show when ELF was a top pick…sending share prices higher:

Tracking unusual volumes reveals the power of money flows.

This is a trait that most outlier stocks exhibit…the best of the best. Big Money demand drives stocks upward.

e.l.f. Price Prediction

The ELF rally isn’t new at all. Big Money buying in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a diversified portfolio.

Disclosure: the author holds no position in ELF at the time of publication.

If you are a Registered Investment Advisor (RIA) or are a serious investor, take your investing to the next level, learn more about the MAPsignals process here.