When elf Beauty Inc (NYSE:ELF) announced its most recent earnings (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well e.l.f. Beauty has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see ELF has performed.
Did ELF’s recent earnings growth beat the long-term trend and the industry?
ELF recently turned a profit of US$29.3m (most recent trailing twelve-months) compared to its average loss of -US$172.7m over the past five years.
The rise in earnings seems to be bolstered by a strong top-line increase outpacing its growth rate of expenses. Though this has led to a margin contraction, it has made e.l.f. Beauty more profitable.
Viewing growth from a sector-level, the US personal products industry has been growing its average earnings by double-digit 13.7% over the past twelve months, and 11.9% over the previous five years. This growth is a median of profitable companies of 18 Personal Products companies in US including Natural Health Trends, Natural Alternatives International and Karex Berhad. This means any uplift the industry is profiting from, e.l.f. Beauty has not been able to reap as much as its industry peers.
In terms of returns from investment, e.l.f. Beauty has fallen short of achieving a 20% return on equity (ROE), recording 14.3% instead. Furthermore, its return on assets (ROA) of 9.2% is below the US Personal Products industry of 11.3%, indicating e.l.f. Beauty’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for e.l.f. Beauty’s debt level, has increased over the past 3 years from 0.04% to 5.9%.
What does this mean?
e.l.f. Beauty’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. I recommend you continue to research e.l.f. Beauty to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ELF’s future growth? Take a look at our free research report of analyst consensus for ELF’s outlook.
- Financial Health: Are ELF’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
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 firstname.lastname@example.org.