ELF BEAUTY INC (NYSE:ELF) – A Strong Contender for Quality Investors

ELF BEAUTY INC (NYSE:ELF) has been identified as a potential candidate for quality investors through our Caviar Cruise stock screener. The company, known for its inclusive, clean, and cruelty-free cosmetics and skincare products, meets several key criteria that align with quality investing principles. Below, we examine why ELF stands out.

Key Strengths of ELF BEAUTY INC

• Revenue and EBIT Growth: ELF has demonstrated strong historical performance, with a 5-year revenue CAGR of 11.85% and an even more impressive EBIT growth of 45.78%. This indicates not only top-line expansion but also improving profitability.
• High ROIC: The company’s Return on Invested Capital (excluding cash and goodwill) stands at 35.39%, well above our 15% threshold. This suggests efficient capital allocation and strong operational execution.
• Healthy Debt Profile: ELF’s debt-to-free-cash-flow ratio is 2.23, meaning it could repay its debt in just over two years using current cash flows—a sign of financial stability.
• Profit Quality: With a 5-year average profit quality of 150.63%, ELF converts net income into free cash flow at an exceptional rate, indicating reliable earnings.

Fundamental Analysis Overview

Our fundamental report assigns ELF a score of 6 out of 10, highlighting strengths in profitability and financial health. Key takeaways:

• Profitability: ELF outperforms most peers in margins, with a gross margin of 71.24% and operating margin of 12.03%.
• Growth: Revenue has grown 28.28% YoY, with analysts expecting continued expansion at 11.85% annually.
• Valuation: The stock trades at a premium (P/E of 36.95), which may reflect its growth potential but warrants caution for value-focused investors.

For investors seeking well-managed companies with strong financials and growth, ELF BEAUTY INC presents a compelling case.

Our Caviar Cruise screener lists more quality stocks and is updated daily.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.