As generalist investors, we go where the opportunities are. While we've typically avoided fashion and beauty stocks due to constantly changing consumer trends, e.l.f. Beauty 
ELF has recently captured our attention and investment dollars.
Three Key Reasons We're Buying:
1. Impressive Growth
We've been impressed by ELF's revenue expansion from $266 million in 2020 to over $1.3 billion today. Their 23 consecutive quarters of increasing sales and market share demonstrates the kind of product-market fit we look for, and with 5.6 million loyalty program members and a widely-downloaded app, their digital strategy is clearly working. We're particularly encouraged by their omnichannel success, achieving #1 status at Target and climbing to #2 at Walmart.
2. Strong Margins
We place high value on ELF's 71%+ gross margins, which have steadily improved since 2022. This margin expansion signals operational efficiency and scale benefits we love to see. Their gross profits have more than tripled to $925 million in just three years – no mean feat in a highly competitive environment.
3. Attractive Valuation
Finally, after the recent selloff, we believe ELF offers compelling value. At 26x forward P/E for a company with 40%+ YoY growth and robust margins, we see this as an attractive entry point despite near-term headwinds.
Risks we're monitoring include potential sales deceleration, shifting consumer preferences, recent bottom-line concerns, and their reliance on social media platforms for marketing momentum. Tariffs could also impact things, although we'll see how those shake out.
Overall, ELF's combination of growth, margins, and the current valuation presents an opportunity too good to pass up. We're buyers at these levels.
ELF has recently captured our attention and investment dollars.Three Key Reasons We're Buying:
1. Impressive Growth
We've been impressed by ELF's revenue expansion from $266 million in 2020 to over $1.3 billion today. Their 23 consecutive quarters of increasing sales and market share demonstrates the kind of product-market fit we look for, and with 5.6 million loyalty program members and a widely-downloaded app, their digital strategy is clearly working. We're particularly encouraged by their omnichannel success, achieving #1 status at Target and climbing to #2 at Walmart.
2. Strong Margins
We place high value on ELF's 71%+ gross margins, which have steadily improved since 2022. This margin expansion signals operational efficiency and scale benefits we love to see. Their gross profits have more than tripled to $925 million in just three years – no mean feat in a highly competitive environment.
3. Attractive Valuation
Finally, after the recent selloff, we believe ELF offers compelling value. At 26x forward P/E for a company with 40%+ YoY growth and robust margins, we see this as an attractive entry point despite near-term headwinds.
Risks we're monitoring include potential sales deceleration, shifting consumer preferences, recent bottom-line concerns, and their reliance on social media platforms for marketing momentum. Tariffs could also impact things, although we'll see how those shake out.
Overall, ELF's combination of growth, margins, and the current valuation presents an opportunity too good to pass up. We're buyers at these levels.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.