Momentum Stock: Elf BeautyELF Beauty Inc is a cosmetics company that offers a range of beauty products primarily for young adults. Their product line includes makeup, skincare, and other related beauty accessories, positioning themselves as a value-oriented, high-quality brand.
Price Performance
Looking at their stock price performance, ELF Beauty Inc has shown robust growth over the past few years. The current price stands at $90.14, marking a substantial increase from its earlier values, as reflected by its impressive 1-year gain of approximately 281.63% and 5-year gain of 350.70%. Its 6-month gain and year-to-date gain are also notable at 68.33% and 60.48%, respectively, indicating sustained and consistent upward momentum.
Relative Strength Index Analysis
The company's relative strength index (RSI) stands at 53. The RSI is a momentum indicator that measures the speed and change of price movements. An RSI value of 70 or above indicates that a stock might be overbought and possibly due for a price correction, while an RSI value of 30 or below could imply that the stock is oversold and might be undervalued. An RSI of 53 for ELF Beauty Inc suggests that the stock is neither overbought nor oversold at the current price level.
Financial Highlights Analysis
ELF Beauty Inc has a market capitalization of approximately $4.78 billion and an EBITDA of $79.6 million. Its Price to Earnings (P/E) ratio is high at 103.092, which may suggest overvaluation, but this can be justified if the company’s future earnings growth is strong. Moreover, the PEG ratio of 2.03 indicates that the company's earnings are expected to grow at a decent pace. The company's profit margin stands at 9.43%, reflecting its ability to generate profits from its revenues. The return on equity (ROE) at 13.56% indicates that ELF Beauty Inc is utilizing its investors' funds effectively.
Valuation Analysis
A closer look at the company’s valuation metrics reveals that the Trailing PE is considerably high at 103.092 while the Forward PE is significantly lower at 45.8716, indicating expectations of improved earnings. The price-to-sales ratio (P/S) of 6.43 and price-to-book ratio (P/B) of 8.35 suggest a relatively high valuation, which can be justified if the company maintains a steady growth trajectory.
Share Statistics and Technical Analysis
There are about 53.3 million shares of ELF Beauty Inc outstanding with approximately 49.9 million floating in the market. The Beta value of 1.5039 suggests that the company’s stock price is relatively more volatile than the overall market. This high beta might offer potential for higher returns but also poses a higher risk.
Dividends and Splits
ELF Beauty Inc does not currently pay dividends, which is not unusual for growth-oriented companies that prefer to reinvest earnings back into the business to fuel further expansion.
Analyst Recommendations and Forecasts
The analyst sentiment towards ELF Beauty Inc is generally positive, as represented by an average rating of 4.0769 out of 5. This rating is a composite score, reflecting the views of 13 analysts in total. A closer examination of individual recommendations reveals that five analysts have issued a "strong buy" recommendation, four analysts have recommended a "buy," while four analysts have suggested a "hold" for the stock. Importantly, no analysts have recommended a "sell" or "strong sell," underscoring the overall optimistic outlook.
The target price set by Wall Street analysts is $97.1, which indicates a potential upside of around 7.7% from the current price of $90.14. The favorable difference between the current price and the target price, combined with the generally positive analyst sentiment, suggests that the market professionals see potential for further growth in ELF Beauty's stock. However, it is always important to keep in mind that these are forecasts and not guarantees, and the actual performance could differ based on a variety of factors.
Major Shareholders
Major institutional shareholders include BlackRock Inc, Vanguard Group Inc, and State Street Corporation. Recent changes in share ownership reveal mixed trends, with some institutions increasing their holdings while others have decreased. It is worth noting that high institutional ownership can often be a positive sign, but it's also important to consider the trend of ownership changes.
Insider Trading Analysis
Insider trading activity can offer valuable insights into how those most closely associated with a company view its potential. Looking at the recent insider trading activities for ELF Beauty Inc, there has been a mix of buying and selling activity over the past 12 months. However, the overall net activity suggests a relatively neutral stance, and therefore, it is difficult to draw firm conclusions based on this alone.
Overview
Overall, ELF Beauty Inc has demonstrated strong growth and performance in the past, with its stock price reflecting this success. The company's financials are robust, and it seems to be positioned well for future growth. The company's valuation may seem high, but considering the strong growth in the cosmetics and beauty industry, it could be justified. Furthermore, a positive analyst outlook points to potential future gains.
However, it is important to remember that while the analysis presented here provides a comprehensive overview of the company, potential investors should always conduct their own due diligence and consider their individual risk tolerance and investment goals before making investment decisions.
Short Term Outlook
In terms of any kind of short term entry, the stock has had a pretty strong pullback and you would need to wait to see if it turns around. We are coming up to earnings so I would definitely want to wait to see how that plays out before making any purchasing decisions.
I would pay particular attention to any upwards movement on both the RSI and MACD for any kind of confirmation. For downside risk management, a trailing stop loss of around 12% would have kept you in most of this trade. If it broke below that it could have been a good sign to exit and look for a new entry when the trend resumed.
As always how you interpret and decide to act on any results is up to you. This is just data not financial or trading advice and past performance is in no way any guarantee of future performance. Think of it as a way to spot stocks you might be interested in and can add to your watch list and perform further research on and or discuss with your broker.
Again. Not trading advice . Industries and companies change. Trends can end. Do your own research / discuss it with your advisor, but might be one to watch.
