Beauty stocks have long been favorites for investors chasing both steady growth and splashy product launches. Major players like Estée Lauder (EL) and L’Oréal (LRLCY) often grab the headlines, but smaller, nimble brands can offer outsized gains for those willing to take a chance, and E.L.F. Beauty (ELF) exactly fits that profile. 

On May 29, ELF shares jumped nearly 24% after the company revealed it would spend $1 billion to acquire Hailey Bieber’s fast-growing beauty brand, Rhode. That deal instantly gives E.L.F. a direct line to Gen Z shoppers seeking prestige products, while diversifying its portfolio beyond mass-market essentials.

At the same time, ELF plans to raise prices by $1 on most products this August to offset new tariffs on Chinese imports. With tariffs in flux and a federal court blocking many of President Donald Trump’s levies, investors are betting E.L.F. can navigate these headwinds. 

For anyone wondering if they should be a “Belieber,” E.L.F.’s record rally and bold acquisition could provide the fuel to keep this rally flowing.

About ELF Stock

Based in California, e.l.f. Beauty is a fast-growing cosmetics brand known for its affordable, vegan, and cruelty-free products. The company continues to strengthen its connection with Gen Z through ongoing innovation. Strategic product launches are fueling steady market share growth. e.l.f. Beauty currently boasts a market cap of $6.5 billion.

Despite rallying 71% over the past month, shares of E.L.F. are still trailing the broader market index, down 7% year to date.

In terms of valuation, ELF trades at a price-to-earnings (P/E) ratio of 33x, nearly 95% higher than the industry average of 17x. However, this current valuation represents a modest discount from its own five-year historical average of 42x, suggesting potential upside if the company maintains its growth trajectory.

Solid Financial Position

Over the past few years, e.l.f. Beauty has built a loyal following by expanding its product lineup with affordable, on-trend cosmetics that resonate with value-conscious consumers. Central to its customer engagement is the e.l.f. Beauty Squad loyalty program, which now exceeds 5.6 million members and continues to grow at approximately 20% per year.

This strong consumer connection has translated into solid financial results. For fiscal 2025, e.l.f. Beauty achieved a 28% increase in net sales, reaching $1.31 billion. Growth was fueled by gains across both domestic and international markets, supported by momentum in retail and e-commerce channels. The company also gained 190 basis points of market share in the U.S., reinforcing its leadership position in the mass beauty category. Its international expansion strategy further supports a long-term growth runway.

While full-year performance was robust, growth began to normalize in the final quarter. In Q4, net sales rose 4% year over year to $332.6 million. This moderate increase contrasts with the 40% growth recorded during the first nine months of the fiscal year, yet it still marks e.l.f. Beauty’s 25th consecutive quarter of positive sales growth, a notable achievement in a competitive landscape.

Profitability also remained strong. In Q4, gross margin expanded by 50 basis points to 71%, demonstrating the brand’s pricing power and ongoing cost efficiencies despite persistent global trade challenges. Adjusted EBITDA rose 26% to $296.8 million for the full year, translating to a healthy 23% EBITDA margin.

The company also strengthened its balance sheet, closing the quarter with an additional $40 million in cash and cash equivalents and reducing total debt by $6 million.

Looking ahead, management chose not to provide formal full-year guidance for fiscal 2026, citing ongoing uncertainties around tariffs and macroeconomic conditions. Nevertheless, analysts remain optimistic, projecting full-year revenue of $1.56 billion and earnings per share of $2.59, reflecting continued confidence in the company’s growth trajectory.

What Do Analysts Say About ELF Stock

Following the announcement of the Rohde acquisition, several analysts have upgraded their price targets and expressed increased confidence in the stock. Raymond James raised its price target from $105 to $130 while maintaining a “Strong Buy” rating, citing the Rohde acquisition as a key driver expected to boost the company’s revenue in the coming years.

Similarly, Morgan Stanley lifted its target from $70 to $105, although it maintained a more cautious “Hold” rating. This indicates the firm is cautiously optimistic about the stock’s prospects.

Overall, Wall Street analysts show a predominantly positive outlook on the stock. Among 16 analysts covering the company, 12 have issued “Strong Buy” ratings while four have assigned “Hold” ratings. The consensus 12-month price target stands at $112.69, below where shares are currently trading.