Shares of E.l.f. Beauty Inc. (NASDAQ: ELF) have experienced considerable selling pressure on Monday afternoon, reversing the initial positive momentum observed immediately after the company released its latest quarterly earnings. Market participants are reassessing the company's financial details and forward guidance amid a mixed trading atmosphere.
The cosmetics company's stock ranks among the weakest performers in today's market, declining sharply as investors digest recent financial disclosures.
Financial Performance Overview
In its third-quarter results, E.l.f. Beauty reported adjusted earnings per share (EPS) of $1.24, surpassing the consensus estimate of 72 cents. Revenues came in at $489.5 million, outperforming expectations which forecasted $459.1 million. The company achieved a 38% increase in net sales compared to the previous year, helped by robust growth in both U.S. and international markets, spanning retail outlets and e-commerce platforms.
Despite the impressive topline increase, gross margin narrowed to 71%. Management attributed this decline primarily to heightened tariffs, which were partially offset by strategic pricing adjustments and sales mix improvements.
E.l.f. Beauty's adjusted EBITDA exhibited strong expansion, rising 79% to $123.0 million, representing 25% of net sales. The GAAP net income for the quarter totaled $39.4 million, with the adjusted net income amounting to $74.5 million.
Guidance and Market Reaction
Following the solid third-quarter results, the company updated its full-year outlook. Adjusted EPS guidance was raised to a range between $3.05 and $3.10, increased from the prior range of $2.80 to $2.85. Revenue guidance was also elevated to a span of $1.60 billion to $1.61 billion, up from the previous estimate of $1.55 billion to $1.57 billion. Both adjustments exceed consensus expectations among analysts.
Immediately subsequent to the earnings release on Wednesday of the previous week, the stock price rallied as investors reacted favorably to the better-than-expected financial performance and optimistic guidance revision.
However, in the trading days that followed, investor enthusiasm waned. Market participants appear to be scrutinizing the details underlying the headline metrics more carefully, weighing the implications of the higher guidance against broader economic and market conditions. By Monday, the stock price retreated, influenced by potential profit-taking, a tempered interpretation of the guidance increase, and adjustments in analyst ratings.
For instance, analyst Oliver Chen of TD Cowen maintained a Buy recommendation on the shares but reduced the price target from $110 to $100, indicating a more cautious outlook.
Technical Indicators and Price Movement
From a technical analysis perspective, E.l.f. Beauty's stock is facing near-term challenges. The share price is currently trading 13.9% below its 20-day simple moving average (SMA) and 24.6% below the 100-day SMA, suggesting significant short-term weakness. Over the preceding 12 months, shares have declined approximately 1.48%, situating the stock closer to its 52-week low than its high, a sign of difficulty in sustaining upward momentum.
The relative strength index (RSI) is presently 46.74, a figure that falls within neutral territory. This indicates the stock is neither overbought nor oversold at this point. Conversely, the moving average convergence divergence (MACD) indicator lies below its signal line, which typically signals bearish pressure.
The combination of a neutral RSI and a bearish MACD reflects mixed market momentum. This technical profile advises caution among traders, as directional consensus remains unclear.
Key technical support is identified around the $69.00 level, while immediate resistance is noted near $82.00.
Current Price and Market Data
At the time of reporting on Monday, E.l.f. Beauty’s stock price was down by 8.15%, trading at $75.40 as per Benzinga Pro data. This decline adds to the stock’s difficulties in short-term price recovery and underscores the sensitive investor sentiment following the earnings cycle.