elf Beauty Inc (NYSE:ELF), which is in the personal products business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NYSE. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at e.l.f. Beauty’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What’s the opportunity in e.l.f. Beauty?
Great news for investors – e.l.f. Beauty is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $23.42, but it is currently trading at US$12.59 on the share market, meaning that there is still an opportunity to buy now. However, given that e.l.f. Beauty’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from e.l.f. Beauty?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for e.l.f. Beauty, at least in the near future.
What this means for you:
Are you a shareholder? Although ELF is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to ELF, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on ELF for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on e.l.f. Beauty. You can find everything you need to know about e.l.f. Beauty in the latest infographic research report. If you are no longer interested in e.l.f. Beauty, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.