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Will e.l.f. Beauty, Inc.'s (NYSE:ELF) Earnings Grow In The Years Ahead?

Simply Wall St

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The most recent earnings announcement e.l.f. Beauty, Inc.'s (NYSE:ELF) released in December 2018 indicated that the business experienced a substantial headwind with earnings falling by -54%. Below, I've laid out key numbers on how market analysts predict e.l.f. Beauty's earnings growth outlook over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for e.l.f. Beauty

Market analysts' consensus outlook for next year seems pessimistic, with earnings reducing by a double-digit -22%. In the next couple of years, earnings are expected to continue to be below today's level, with a decline of -11% in 2021, eventually reaching US$14m in 2022.

NYSE:ELF Past and Future Earnings, April 2nd 2019

Although it is useful to understand the growth each year relative to today’s level, it may be more valuable estimating the rate at which the company is rising or falling on average every year. The advantage of this technique is that we can get a better picture of the direction of e.l.f. Beauty's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 13%. This means, we can presume e.l.f. Beauty will grow its earnings by 13% every year for the next few years.

Next Steps:

For e.l.f. Beauty, I've put together three relevant factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ELF worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ELF is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ELF? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.