ELF Beauty stock is the IBD Stock of The Day as it eyes a possible breakout after finding support at a key level. Significantly, ELF stock nearly doubled in the past year and more than quintupled over the past two years. Teen-loved cosmetics brand ELF Beauty skyrocketed on the back of outsize earnings and revenue growth, but it faces challenges in upcoming quarters.
ELF Beauty Stock
ELF stock is working on a 202.58 buy point from a cup-with-handle base. Shares found support at their 50-day line within the handle, a bullish trait. The beauty stock rose 1.6% on Thursday but closed just over a dime short of the entry.
Shares jumped 21% the week of May 24 in the highest volume since the base began to form 14 weeks ago, MarketSurge pattern recognition shows. Then they pulled back to the 50-day moving average in early June, rebounding off that support level this week.
Among other favorable signs, ELF stock shows an Accumulation/Distribution Rating of A-, which indicates heavy institutional buying. Much of the volume upside came the week of May 24, when ELF Beauty reported far stronger-than-expected earnings.
In the minus column, the relative strength line is lagging. The RS line bolted higher from March 2022 to March 2024.
Further, the ELF Beauty stock chart shows a third-stage base. Shares have soared 485% from the initial breakout in July 2022. So it may be asking too much for ELF to make yet another big run.
ELF stock earns a 93 Relative Strength Rating out of a best-possible 99. That is up from 90 four weeks ago. The RS Rating means that ELF Beauty stock has outperformed 93% of all stocks in IBD's database over the past year.
The latest 202.58 entry for ELF Beauty stock marks the high achieved on June 3. The beauty play surged on June 3 as analysts at DA Davidson named it a "Best-of-Breed" company with sustainable competitive advantages and favorable risk-reward dynamics.
Year to date, ELF Beauty stock has jumped 37%. It has nearly doubled in the past year, vaulting 93%.
ELF Beauty Earnings
In its latest quarter, ELF Beauty earnings jumped 26% to 53 cents per share, vs. expectations for a 21% decline. Sales vaulted 71%, year over year, to $321.1 million. But the company gave cautious guidance. Market watchers also have warned of a beauty products market slowdown.
Analysts expect earnings declines in the current June-ending quarter and the following September-ending quarter, FactSet shows. That would be the first quarterly earnings drop since Q4 of fiscal 2022.
The anticipated quarterly earnings declines in part reflect extremely tough comparisons. ELF Beauty rang in earnings growth of 182% and 127% in the respective year-ago quarters.
On a per-share basis, ELF Beauty earnings boomed 98% and 92% in the last two fiscal years. Analysts expect earnings growth to slow sharply to 7% in the current fiscal year.
Sales are seen growing a robust 25% this year. But that would be down from 77% last year.
Retail heavyweights including Walmart, Target and Ulta Beauty stock ELF Beauty products.
Elf Beauty flourishes a 97 Composite Rating out of a best-possible 99. The Composite Rating combines various technical and fundamental metrics into one easy-to-read score. The stock bears a near-perfect 98 EPS Rating.
Elf Beauty stock holds one of the highest EPS Ratings in the Cosmetics/Personal Care Group, according to IBD Stock Checkup.
