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e.l.f. Beauty Faces Tough Times: Analysts Predict Difficult Road Ahead
e.l.f. Beauty, known for its array of cosmetic products including makeup, lip treatments, and beauty tools, is currently facing challenges in its earnings outlook. Analysts have adopted a bearish perspective, placing the company under a Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
Let’s delve deeper into the situation surrounding the company.
Current State of e.l.f. Beauty
Over the past year, e.l.f. Beauty’s shares have been severely impacted, plunging more than 60%. This decline starkly contrasts the performance of the S&P 500. Despite attempts to show positive quarterly results, a cooling growth trend has kept investor sentiment subdued.
Image Source: Zacks Investment Research
The slowing growth can be illustrated by examining the chart below, which shows the year-over-year percentage change in sales. Keep in mind that these are not actual sales figures.
Image Source: Zacks Investment Research
Though sales growth remains relatively strong, the evident slowdown has significantly contributed to the recent downturn in share prices. Thankfully, while growth rates have stalled, the company’s profit margins remain promising, as indicated in the chart below.
Image Source: Zacks Investment Research
Conclusion and Outlook
Recent negative earnings estimates, stemming from the cooling growth, showcase a tough outlook for e.l.f. Beauty in the short term.
Currently rated as Zacks Rank #5 (Strong Sell), it appears that analysts foresee challenging conditions ahead for the company’s earnings.
Investors may want to consider focusing on stocks with a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy), as these often have a stronger earnings outlook and may offer significant gains soon.
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Originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
