e.l.f. Beauty ELF recently warned about slowing sales in January 2025. As a result, this Zacks Rank #5 (Strong Sell) lowered its fiscal full year 2025 guidance and shares sank.

e.l.f. Beauty operates a beauty company with a mission to make the best of beauty accessible to every eye, lip, and face. Its brands include e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People and Naturium. e.l.f. Beauty offers clean and vegan products.

e.l.f. Beauty Misses on Earnings for the First Time Since 2021

On Feb 6, 2025, e.l.f. Beauty reported its fiscal third quarter 2025 earnings results. It missed on earnings for the first time since early 2021.

Earnings were $0.74 compared to the Zacks Consensus of $0.76.

Sales, however, rose 31% to $355.3 million, driven by strength in both the retailer and e-commerce channels, in both the U.S. and internationally.

Gross margin increased again, rising 40 basis points to 71%, due to favorable foreign exchange impacts on goods purchased from China, cost savings and inventory adjustments, partially offset by mix and higher transportation costs.

e.l.f. Beauty’s CEO, Tarang Amin, said in the press release that e.l.f. gained 220 basis points of market share in the US in the quarter.

e.l.f. Beauty Lowered Fiscal 2025 Earnings and Sales Guidance

However, in a shock announcement, e.l.f. Beauty saw softer than expected trends in January, so it lowered its fourth quarter and full year guidance.

It now expects 27-28% year-over-year net sales increase for the quarter, down from its prior guidance of 28-30%.

Full year earnings guidance was also lowered to a range of $3.27 to $3.32 from the prior guidance of $3.47 to $3.53.

As a result, the analysts have cut their fiscal 2025 estimates, but also their fiscal 2026 estimates, in the last 30 days.

13 estimates were cut for fiscal 2025, which pushed the Zacks Consensus down to $3.33 from $3.60 during the last month. That is earnings growth of just 4.7% over fiscal 2024 as the company made $3.18 last year.

13 estimates were also cut for fiscal 2026 after the earnings report. The 2026 Zacks Consensus Estimate has fallen to $3.63 from $4.35 in that time. However, that’s still earnings growth of 9.1%.

Here’s what it looks like on the price and consensus chart. The prior years saw strong earnings growth but now, the consensus is being cut.

Image Source: Zacks Investment Research

e.l.f. Beauty Shares Slide in the Last Year

e.l.f. Beauty shares got slammed on the lowered guidance, but they had already been weak since July of 2024. They are down 54% in the last year but remain above the S&P 500’s performance of the last 5 years.

Image Source: Zacks Investment Research

e.l.f. Beauty was one of the big growth stocks coming out of the pandemic. Investors bid the shares up to sky-high valuations with high price-to-earnings (P/E) multiples as they were willing to pay more for the growth.

With the shares coming down, it now trades with a forward P/E of 21.9. That is still not a value stock, even though it’s looking more attractive. Value stocks usually trade under 15x.

Is the consumer permanently slowing down purchases with respect to beauty?

Only time will tell. But investors might want to wait on the sidelines until e.l.f. Beauty’s sales outlook improves.

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