Beauty stocks have been struggling, but e.l.f. Beauty (ELF) is still beating the odds. ELF shares are down sharply from their 2024 highs, yet the company keeps taking market share, expanding overseas, and winning over new customers with its TikTok-heavy playbook. For investors, this makes ELF stock stand out in a fading sector.
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e.l.f Beauty Beats the Industry While Peers Struggle
Cosmetics giants like Coty (COTY) and Estée Lauder (EL) have lost more than 40% of their value since early 2024 as growth slowed and margins shrank. e.l.f. has also taken a hit, dropping 39% from record highs. But the difference is evident. While rivals are shrinking, e.l.f. continues to post growth that outpaces the industry.
In the Fiscal first quarter, sales jumped 9% year-over-year to $354 million. That’s double the pace of the sector, and international sales surged 30%, showing the company still has plenty of room to expand abroad. In the U.K., growth was triple the industry average.
Social Media Is Driving Growth
e.l.f. has become a master at marketing where its core customers spend the most time, and that is online. The company spends heavily on TikTok campaigns and digital ads, putting its products in front of younger shoppers and turning them into loyal buyers.
The strategy is working. e.l.f. has gained market share for 26 straight quarters. Its partnership with Dollar General (DG) has also been key. This brought in first-time buyers in rural areas where major cosmetics brands have less reach.
Tariffs Bite, but e.l.f. Holds Pricing Power
However, margins are under pressure. Gross margin slipped to 69.1% from 70.8% last year as tariffs raised costs on products imported from China. Management expects the drag to continue through the next quarter.
But e.l.f. has room to offset that pain. In August, the company raised prices by $1 on some products. Demand didn’t fade, because most items are still priced under $10, well below the competition. Analysts expect sales growth to keep accelerating even after the hikes.
Analysts See Growth Ahead
Analysts think the momentum is far from over. Deutsche Bank (DB) analysts think sales could climb more than 20% in the second quarter, boosted by the Rhode acquisition. Rhode, Hailey Bieber’s skincare brand, adds $50 million in quarterly revenue and deepens e.l.f.’s hold on the skincare market.
Longer term, analysts forecast sales rising 18% annually to $2.17 billion by 2027, with margins recovering to 71%. That growth could lift earnings per share by 22% a year. If the stock maintains its current multiple, shares could reach $165 by the end of 2026, and even higher if momentum returns.
Overall, it seems like e.l.f. has separated itself from the pack. While beauty giants wrestle with slowing growth, e.l.f. is proving it can keep expanding, both in the U.S. and overseas. Tariffs are a headwind, but pricing power and a strong brand strategy are keeping growth intact.
For investors looking for a beauty stock that still has room to run, e.l.f. may be the rare name worth buying on the dip.
Is ELF a Good Stock to Buy Right Now?
Analysts remain bullish on e.l.f. despite the sector’s slowdown. Out of 16 ratings in the past three months, 13 are Buys and only three are Holds, giving the stock a Strong Buy consensus. The average 12-month ELF price target sits at $140.29, implying modest upside from current levels.
