Barron's — Our e.l.f. Beauty Stock Pick Had an Ugly Year. Better Days Lie Ahead.
A one-year follow-up on a losing pick: shares are down ~17% since the recommendation but have more than doubled off the Iran-war low, and raised FY2027 guidance says the share-gain story is back.
One-line take: Barron's reiterates e.l.f. Beauty (ELF) a year after recommending it. What went wrong: November 2025 guidance for only low-single-digit organic growth after the company over-shipped to Dollar General and Target, then the Iran-war energy shock sent the volatile stock to ~$50. What's changed: in August management raised FY2027 sales growth to just over 19% (~$1.95B), of which ~13 points is the rhode (Hailey Bieber) acquisition and ~6 points organic — "a vast improvement" in a mature industry; analysts see ~8% in FY2028. $404M FY27 EBITDA guidance implies +20bp margin, so if marketing/infrastructure spend starts to leverage, EPS can grow "well into the double digits." Deutsche Bank's Steve Powers raised his target on outer-year margins. At ~29x NTM vs 37x sustained in the past year, Sonenshine says don't give up — shares at $107, more than double the low. (ELF Positive.)
1. Stocks & names mentioned
A written Barron's follow-up (no video), so the "At" column links to the article. Dollar General and Target are named only as the retailers that were over-shipped, and rhode is a private brand e.l.f. now owns — none carries a view, so they are not rowed. Research legend: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
| Ticker | Name | Research | View | What the article said | At |
|---|
| ELF | e.l.f. Beauty | QT · SA · STK · FA | Positive | Barron's follow-up — still a buy. Down ~17% to $107 since last year's pick (over-shipping to Dollar General/Target, weak organic guide, Iran-war drop to ~$50) but more than doubled since. August raise: FY27 sales +19% (~$1.95B; ~6 pts organic + ~13 pts rhode), $404M EBITDA with +20bp margin; ~8% growth expected FY28. Margin leverage could drive double-digit EPS growth. ~29x NTM vs 37x in the past year: "Don't give up on this name." | read ↗ |
2. Talking points
Scoring the original pick honestly
- Shares down ~17% to $107 since Barron's recommendation almost exactly a year ago (the key points say 18%).
- Main hit: November 2025 guidance for low-single-digit organic growth — e.l.f. had over-shipped to Dollar General and Target, whose shelves were already loaded. Analysts cut estimates; total growth was higher only because the rhode deal closed.
- Second hit: the Iran war and rising energy prices raised consumer-demand worries; the volatile stock fell to ~$50. It has since more than doubled.
The August guidance raise
- FY2027 sales growth raised to a touch over 19% at the midpoint, ~$1.95B revenue.
- CFO Mandy Fields: ~13 points from rhode, leaving ~6 points organic — "a vast improvement" and strong for a mature global industry.
- FY2028 slower as rhode laps; analysts expect a normalized ~8%. Management re-emphasized its "white space" — beauty spending it can still capture — in an industry worth hundreds of billions (McKinsey).
From sales growth to earnings growth
- Heavy marketing spend (TikTok and social) persists, but $404M FY27 EBITDA guidance still implies a +20bp margin.
- If investments leverage over time, EPS outgrows sales, potentially "well into the double digits annually."
- Deutsche Bank's Steve Powers raised his target on "higher outer-year margin assumptions as rhode scales, international mix expands, and recent marketing and infrastructure investments begin to leverage."
Valuation
- ~29x next-12-month earnings — lofty vs indexes in the 20s, but the stock sustained 37x in the past year. Subhead also notes technicals point higher.
3. In plain English
A jargon-free summary of how each name is framed in the article. (Plain-language companion to the table above; renders on each ticker's consolidated page.)
ELF — e.l.f. Beauty Positive
e.l.f. sells low-priced makeup and skincare, mostly through big retailers, and has grown by taking customers from older, pricier brands. Barron's recommended it a year ago and it went badly: e.l.f. had shipped more product to stores like Dollar General and Target than they could sell, so the next year's orders looked weak; then the war with Iran and high energy prices scared investors about shoppers' budgets, and the stock briefly halved to about $50.
Barron's still likes it. In August the company raised its forecast: sales should grow about 19% this fiscal year. Most of that comes from buying rhode, Hailey Bieber's skincare brand, but about 6% is growth from its existing brands — a lot better than last year's gloomy outlook, in an industry that barely grows overall. That means e.l.f. is still winning market share.
The profit angle: e.l.f. spends heavily on social-media marketing. If sales keep growing faster than that spending, profit per share can grow faster than sales. At about 29 times expected earnings — below the 37 times it sustained in the past year — Barron's thinks the stock, now around $107, has further to go.
Summary derived from the Barron's article (full text saved in transcript.txt) for personal study. Not investment advice. © Barron's / Dow Jones for source material.