e.l.f. Beauty, Inc. (ELF)
StocksNY
1. Valuation Metrics (Rating: 4/10)
- P/E Ratio: ELF’s P/E ratio is relatively high compared to many peers in the cosmetics/beauty industry. Recent strong price performance has stretched valuation multiples, suggesting the stock is trading at a premium.
- P/B Ratio: Also elevated, reflecting the market’s optimism about growth prospects.
- Dividend Yield: ELF does not pay a dividend, so there’s no yield or payout ratio to analyze here.
Overall: The company’s valuation is on the pricier side, which lowers the score.
2. Financial Health (Rating: 8/10)
- Debt-to-Equity Ratio: ELF’s debt levels are fairly modest, and the company has managed leverage well.
- Current Ratio: Generally above 1.5, indicating good short-term liquidity and ability to cover immediate liabilities.
- Profit Margins: Gross margins and net margins have been healthy and show stability or improvement over time.
Overall: Strong liquidity and controlled leverage improve its financial health score.
3. Growth Potential (Rating: 9/10)
- Revenue & EPS Growth: ELF has delivered impressive top-line growth and improving EPS in recent years, outpacing many industry peers.
- Forward Guidance: Analysts have been raising growth estimates, buoyed by strong brand momentum and expanded retail distribution.
Overall: The company’s ability to continue growing market share (particularly in the affordable, cruelty-free segment) supports a high score for growth.
4. Cash Flow Strength (Rating: 8/10)
- Free Cash Flow (FCF): ELF generates positive free cash flow, a good sign for reinvestment or potential debt reduction.
- FCF Yield: Not extremely high given the company’s increased valuation, but still healthy enough to be a positive indicator.
Overall: Good FCF generation and adequate reinvestment capacity support a solid score.
5. Industry Position (Rating: 8/10)
- Competitive Moats: ELF’s niche is affordable, cruelty-free, and vegan cosmetics. That brand positioning has gained strong traction, giving it a “moat” with younger, value-conscious consumers.
- Market Share: Rising in a highly competitive sector (cosmetics/personal care). Continues to expand store presence and DTC channels.
Overall: A recognized brand and expanding shelf space yield a robust industry-position score.
6. Management & Governance (Rating: 9/10)
- Track Record: Current leadership has executed well, growing the brand and expanding profitability.
- ESG/Governance: ELF’s cruelty-free and vegan positioning aligns with strong ESG trends; no major governance red flags reported.
Overall: Management execution and alignment with ESG values boost this category.
7. Risk Factors (Rating: 6/10)
- Beta/Volatility: The stock has shown higher volatility (beta often >1), reflecting market sentiment swings on growth stocks.
- Sector Risks: Consumer discretionary spending can be sensitive to economic slowdowns. A beauty/cosmetics slowdown could impact ELF more than staple-like products.
Overall: Some heightened volatility and reliance on consumer trends keep the risk score moderate.
8. Market Sentiment (Rating: 9/10)
- News/Events: Mostly positive coverage; strong sales and brand buzz have propelled the share price.
- Technical Indicators (e.g., RSI): The stock has often traded in or near “overbought” territory, but the bullish momentum has persisted.
Overall: Sentiment is very favorable; analysts and investors have rewarded ELF’s growth.
9. Margin of Safety (Rating: 3/10)
- Intrinsic Value vs. Current Price: Given high multiples (P/E, EV/EBITDA) and robust share price appreciation, the margin of safety is slim if growth disappoints.
- Valuation Premium: The premium may be justified by growth, but it does limit downside protection.
Overall: The stock’s elevated valuation lowers the margin of safety score.
10. Peer Comparison (Rating: 7/10)
- Key Multiples: Compared with traditional beauty giants (e.g., Estée Lauder, L’Oréal), ELF trades at a premium but also has faster growth.
- ROE and Growth vs. Peers: ELF’s returns and top-line growth are strong, but you are paying for that growth.
Overall: Outperforms peers on growth; trades at higher multiples—netting a solid (though not perfect) comparison score.
Total Score: 71 / 100
- Strengths: Growth trajectory, financial health, brand momentum, and strong management execution.
- Weaknesses: High valuation, limited margin of safety, and above-market volatility.
Bottom Line: e.l.f. Beauty scores strongly on growth, brand strength, and operational metrics. However, the stock is not cheap. For investors focused on value or margin of safety, current valuations may be a deterrent. Growth-oriented investors may still find the story compelling, but should be aware of the premium they are paying.
Disclaimer:
This stock review has been generated using artificial intelligence and is for informational purposes only. The content provided does not constitute financial, investment, or trading advice. AI analysis may not account for all market factors, and past performance is not indicative of future results.
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