Beauty products

elf Beauty: Growing Innovator in Affordable Beauty (NYSE: ELF)

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elf beauty (NYSE:ELF) has proven countless times over the decades that high-quality beauty is not exclusive to luxury products, priced at the mainstream. Consumer demand and pricing are big factors in the beauty industry, and having touched many subsets within the business, elf Beauty’s reach is nearly unmatched with its very affordable pricing.

ELF Awards

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In this article, I will expand on elf Beauty’s strategy for the coming year and how the company will prepare for an inflated market in the near future. In doing so, the company will continue to turn a profit as the economy continues with uncertainty, underscoring the importance of its growth across the market.

The beauty industry after Covid-19

While the pandemic seemed to simmer in terms of news and focus, it begs the question of how industries are generally reacting to waking up to a new world of uncertainty. In fact, the beauty industry, particularly skincare, has been the least impacted by Covid-19, as consumers have turned to everyday moments of self-care to combat the stressors of the pandemic. However, it is essential to remember that skincare is the leading sector of the beauty industry and will continue to dominate the market segment till 2022. According to Fortune Business Insights, the global skincare market skin will reach an estimated $145.8 billion by 2028. Some projected areas where the beauty industry is expected to expand as the norm coming out of a pandemic era is mask wearing. With this mask wearing, only the eyes were shown, and so many people used makeup as an embellishment choice over everyday face wear. Additionally, the skincare segment of the beauty industry is set to see astronomical growth, as data revealed by Style Insights shows that facial care generated 241% more clicks by the end of 2020. compared to 2019. These numbers are expected to increase further with the next generation. of skincare users adapt more quickly to beauty trends, and are even interested in this field at an earlier age.

ELF prices vs revenue

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In terms of industry alignment, elf Beauty offers a multitude of product lines ranging from makeup to skincare in their field. In recent times and with the conditions that have followed 2021, cosmetics sales have increased considerably, and this includes elf Beauty. Reported on February 2, the company announced that its revenue reached $98.12 million for the quarter, demonstrating its market presence and continued growth, with the company also up 10.8% from compared to the same quarter of the previous year. So the takeaway is that elf Beauty will be a terrific investment as investors might be interested in taking a bullish stance with the beauty giant.

elf beauty and industry trends

As mentioned earlier, the beauty industry is huge and generates even bigger revenue every year. The skincare market segment and some brands in the beauty industry saw positive returns, and elf Beauty was no exception. At $283 million for fiscal 2020, the brand is maintaining its earlier strides in affordable beauty with “prestige quality” more than ever, emphasizing affordability in more conservative purchasing decisions.

ELF price vs profit

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At the start of 2022, there were a multitude of economic changes from many angles, including inflation. With inflation easing on the corporate side, elf Beauty is looking to increase their prices by $1 on various SKUs where they have the most pricing power; however, their transparency in the company initiative remains the same as they intend to keep their infamous low priced items the same as before the current economic conditions. Even then, a single dollar increase is unlikely to affect the company’s loyal customer base due to its affordability despite harsh conditions.

That being said, as elf Beauty assesses itself and increases its guidance for the full year, its target net sales are over $379 million. With an all-time record of record numbers even in the worst conditions, elf Beauty will undoubtedly make its mark in the industry. With the announcement of elf Beauty as it increases its prices in certain areas, the brand continues to focus on customer centricity. Such customer focus is a valuable detail often overlooked with purely quantitative analysis. elf’s core consumer proposition is quality and affordability, achieved through innovation. Lately, the company has also sought to improve its view on corporate social responsibility and announced its goal of making its brand “100% clean” by the end of 2022. Such is a bold statement from a beauty brand; however, this seems to be the growing industry trend as many industries across the business spectrum aim to reduce their overall carbon footprint. Together with elf Beauty, their brand worked to reformulate over 350 SKUs heading into 2022 to make the aforementioned 2022 goal a reality.

The future of elven beauty

ELF price vs EPS vs EBIT

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As elf Beauty grows and maintains its close relationship with its customer base, that connection only equates to growth in the company’s earnings per share. Over the past few years, elf Beauty has grown its EPS by 5.8% per year. Despite the slow growth, the fact that there have been relatively minimal obstacles in their growth and maintenance illustrates that the company is marked by continuous growth. With revenues growing and EBIT margins improving from 3.4% to 7.5% in the last year of 2021 alone, there is only positive news all around.

Beauty is an ever-growing business and there doesn’t seem to be a decline in demand, especially with current economic trends and the increasing number of people choosing to make frugal buying decisions. Currently, insiders hold a considerable amount of stock, amounting to $84 million. This would be an indication of the company’s drive to succeed, and therefore a strong indicator for future investors that management itself believes in the long-term growth of the brand. That being said, the bullish investor can support the business outlook for elf Beauty, as its projection based on past performance could lead to even better days. Although not currently undervalued, elf Beauty could prove to be a rising company in terms of profitability, like other companies with strong growth-based arguments. It is for these reasons that I believe investors have much to look forward to in the coming quarters and should be optimistic about the future of elf Beauty.