ELF Jumps 18.8% in a Week Amid Rhode Growth and Stronger Guidance

Rhode Gives ELF a Powerful Growth Engine

Rhode contributed about $160 million of first-quarter fiscal 2027 net sales, exceeding management’s expectations. Its latest summer launch generated $27 million of direct-to-consumer sales in one day and attracted 90,000 new consumers.

More than 70% of that launch-day sales came from existing consumers, pointing to repeat demand. Rhode is also set to enter Sephora across 19 European countries in September, expanding a brand that remains in less than 20% of Sephora’s global store base.

ELF's Raised Outlook Supports the Momentum

Management raised fiscal 2027 net sales guidance to $1.938-$1.968 billion, implying 18%-20% growth. The prior outlook called for $1.835-$1.865 billion and 12%-14% growth.

Adjusted earnings guidance also increased to $3.50-$3.55 per share from $3.27-$3.32. The higher outlook follows first-quarter net sales growth of 36% to $479.4 million and adjusted earnings of $1.75 per share.

International Growth Broadens ELF's Runway

International net sales increased 61% in the first quarter, well ahead of 29% growth in the United States. Planned expansion includes e.l.f. with Sephora in Brazil, Rhode across Europe and Naturium with Sephora in Canada and Mexico.

The broader beauty market also shows continued demand across channels. Ulta Beauty, Inc. ULTA reported an 11.1% first-quarter fiscal 2026 net sales increase, while its comparable sales rose 5.3%, underscoring ongoing activity in specialty beauty retail.

Core ELF Weakness Tests the Rally

Organic net sales excluding Rhode declined at a high-single-digit rate in the first quarter, while companywide unit volumes reduced growth by about three percentage points. That softness shows the flagship business has not yet matched the pace of the acquired portfolio.

Management expects improving e.l.f. trends and raised fiscal 2027 organic net sales growth guidance to 6%-7%. The recovery still depends on innovation, value actions and demand holding up as consumers remain concerned about the economy.

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ELF's Valuation Raises the Bar

ELF trades at 26.8X forward 12-month earnings, above 20.7X for the Zacks cosmetics sub-industry, 16.8X for the Consumer Staples sector and 20.7X for the S&P 500. That premium raises the importance of delivering on the new outlook.

Competitive context is mixed. The Estee Lauder Companies Inc. EL raised its fiscal 2026 organic sales outlook to about 3% in May, but its makeup net sales were virtually flat in the fiscal third quarter, illustrating uneven demand even among large beauty companies.

ELF's Growth Signal Stays Strong

The one-week rally is backed by faster reported growth, a stronger fiscal 2027 outlook and meaningful Rhode expansion. The counterweight is clear: core-brand softness and a premium earnings multiple make continued execution important.

ELF currently carries a Zacks Rank #1 (Strong Buy) and a Growth Score of A, a combination that supports the near-term growth case. The Zacks Style Scores are designed to complement the Zacks Rank by evaluating characteristics tied to different investing styles. You can see the complete list of today’s Zacks #1 Rank stocks here.

Its Value Score of F and Momentum Score of D are less favorable, while the VGM Score of C reflects a mixed overall profile. Those readings temper the growth signal and suggest investors should weigh the company’s operating momentum against valuation and price-related characteristics.

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This article originally published on Zacks Investment Research (zacks.com).

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