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Why Elf Beauty Stock Soared Today
Cosmetics company shares beauty elf (NYSE:ELF) made a big move higher on Thursday after the company released financial results for the fourth quarter of fiscal 2024. As of 10 a.m. ET, elf Beauty shares were up a strong 14%.
Mastering Market Share Growth
In its fiscal year 2024 (ending in March), elf Beauty generated net sales of more than $1 billion, representing remarkable 77% year-over-year growth. The company appears to have mastered the art of using social media to increase brand awareness, and it has paid off with five consecutive years of market share gains.
elf Beauty shares wobbled in after-hours trading yesterday, in contrast to this morning’s big gains. While investors are encouraged by the growth, some are already looking ahead to fiscal 2025. For this next fiscal year, management is only guiding for revenue growth of around 21%.
For some, elf Beauty’s slowing growth rate is a problem. However, the 21% growth is still quite good and points to a sixth year of market share gains, which is why investors are more excited than cautious today.
What’s next for elf Beauty?
I could see elf Beauty stock cooling off for a period. With management’s guidance for the full year, she expects earnings per share (EPS) of $3.20 to $3.25. For perspective, it just reported full-year adjusted earnings per share of $3.18.
Therefore, revenue growth is expected to slow and adjusted earnings are expected to remain essentially flat year over year. So it’s possible that investors won’t be as excited this upcoming fiscal year as they have been in the past.
That said, I see reasons for elf Beauty shareholders to continue participating. Growth is never a straight line – it ebbs and flows. And management appears to understand viral marketing better than its peers, which is an important strength in the the cosmetics space with a relatively low barrier to entry.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions and recommends elf Beauty. The motley fool has a disclosure policy.
Why Elf Beauty Stock Soared Today was originally published by The Motley Fool