Is E.L.F Beauty Stock a Buy? A Deep Dive into Its Investment Potential

PUBLISHED Jun 3, 2025, 1:51:43 AM        SHARE

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Welcome back, everyone! Today, we’re taking a close look at E.L.F Beauty (NYSE: ELF) to see if it’s a worthy addition to our portfolios. E.L.F Beauty, based in California, is a well-known cosmetics brand offering a broad range of products including bath and skin care, mineral-based makeup, professional tools, eyeliners, lipsticks, and more.

A similar company you might be familiar with is Ulta Beauty—which, for many retail locations, seems to be everywhere. However, today’s focus is solely on E.L.F Beauty.

Stock Performance

Taking a look at the five-year chart, E.L.F Beauty’s stock has surged 389%. While that sounds impressive, the stock has fallen significantly from its all-time high of $210, now sitting at $61. Over the last year, it has dropped 64%, which is about $110.

So, is the stock undervalued? Let’s analyze its intrinsic value and determine whether it's a strong buy.

Profitability & Margins

Diving into some numbers, E.L.F Beauty's profit margin currently sits at 7.55%, while the operating margin is 9.87%. These numbers aren’t terrible—but they’re also not spectacular. Given that many of their products are manufactured in China, one would expect better margins, but rising tariffs could pose a challenge.

Still, consumer demand remains strong. Their products, priced at $10 to $20, could easily absorb price increases of $2 to $3 without significantly impacting sales. Makeup buyers tend to continue purchasing their favorite products despite modest price hikes.

Read More: 5 Stocks that may perform better than E.L.F.

Company Symbol Why It's Better Than ELF
Shiseido SSDOY Stronger global brand recognition and premium product positioning.
BellRing Brands BRBR Higher revenue growth and broader consumer health focus.
Coty Inc. COTY Larger market share in cosmetics and stronger international presence.
Interparfums IPAR More diversified fragrance portfolio with consistent profitability.
Oddity Tech ODD Innovative digital-first beauty model with higher growth potential.

Revenue & Earnings Growth

One promising factor is quarterly revenue growth, which has grown 31% year-over-year. However, earnings growth tells a different story—it has declined by 35%.

This discrepancy suggests the company is expanding revenue, but struggling to convert that into higher profit margins. Investors will need to watch closely to see whether the management team can optimize operations to improve profitability in the coming quarters.

Analyst Ratings & Forecasts

According to 18 analysts, E.L.F Beauty holds an overall buy rating of 4.16 on a scale of five. The ratings break down as follows:

  • 9 Strong Buys
  • 3 Buys
  • 6 Holds
  • 0 Sells
  • 0 Strong Sells

While this rating indicates positive sentiment, it doesn’t directly correlate to intrinsic value. Analysts estimate the fair price to be a minimum of $82 per share.

Looking ahead to 2025, the company is projected to miss earnings estimates in Q3—the quarter when tariffs may take effect. However, estimates improve in Q4, likely due to holiday shopping surges. Since E.L.F Beauty has a strong Amazon and e-commerce presence, this seasonal demand could significantly boost revenue.

Starting in 2026, forecasts suggest negative earnings early in the year, but positive growth throughout the remainder of the year. This aligns with our general rule: we want to see annual EPS and revenue increasing, which seems to be the trend.

Intrinsic Value Assessment

Now, let’s calculate E.L.F Beauty’s intrinsic value using a discounted cash flow approach. The earnings growth rate stands at 34.8%, while the current stock price is $61.

Using the updated Graham formula, the fair value estimate ranges from $130 to $62 per share—meaning, even under conservative assumptions, there's upside potential of 2%.

However, I rely more on the updated Graham formula, rather than the analysts' conservative estimates. With its earnings per share currently low, the long-term growth rate projection suggests improvement. Under these conditions, E.L.F Beauty’s stock could be worth $116.

But as always, investing is about minimizing risk. Applying a 35% margin of safety, the ideal buying price for this stock would be around $75—which still offers strong growth potential.

Risk vs. Reward

At $61 per share, E.L.F Beauty seems to have significant upside. Even if tariffs negatively impact the stock and cause further declines, long-term investors might find opportunities to average down their cost.

Personally, I see strong risk-to-reward potential in this stock. While I’m not a financial advisor, I’m considering adding E.L.F Beauty to my portfolio.

Brand Strength & Consumer Demand

Beyond numbers, let’s talk about brand perception. E.L.F Beauty maintains a modern, direct-to-consumer presence. Their website is simple and efficient, making it easy for shoppers to engage with the brand.

I’ve asked people I know—specifically women who regularly purchase makeup—what they think of E.L.F Beauty. Across the board, the feedback has been overwhelmingly positive.

Consumers love the brand and purchase products regularly—especially when shopping online or browsing Amazon and Instagram ads. Since many of the items are priced at $10 to $15, impulse purchases happen often.

Final Thoughts

So, what do you think? Is E.L.F Beauty stock worth investing in, or is the risk too high given potential market volatility?

https://youtu.be/JmQ3cbKq39I?si=039c8fDO--TG2aLv

ELF, Buy

E.l.f. Beauty Inc.
Return: 16.51%

ELF, Buy

Return: 16.51%


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