ELF BEAUTY INC (NYSE:ELF) Shows Strong Growth Potential with Solid Fundamentals and Technical Breakout Signals

Investors looking for high-growth opportunities often use both fundamental and technical analysis to find stocks with strong earnings potential and favorable chart patterns. One method involves searching for companies with steady revenue and earnings growth, good profitability, and strong financials, while also showing technical patterns that indicate possible breakouts. This combined approach helps identify stocks with solid business performance and signs of increasing investor interest.

ELF BEAUTY INC (NYSE:ELF) stands out as a stock that fits this strategy, showing both improving fundamentals and a promising technical setup.

Fundamental Strength Points to Growth

The company’s fundamentals highlight several strengths that match growth investing criteria:

• Steady Revenue and Earnings Growth: ELF has achieved notable revenue growth of 28.28% YoY, with a 3-year average growth rate of 35.94%. Earnings per share (EPS) have grown at an annual rate of 40.01% over the same period, well ahead of many competitors in the Personal Care Products industry.
• High Profitability Margins: The company has a 71.24% gross margin, better than 68.57% of its industry peers. Its operating margin (12.03%) and profit margin (8.53%) are also above average, showing effective cost control and pricing strength.
• Solid Financial Position: With an Altman-Z score of 9.99 (suggesting low bankruptcy risk) and a reasonable debt-to-equity ratio of 0.34, ELF maintains a stable balance sheet. Its current ratio of 3.05 further highlights strong liquidity.

While the stock trades at a higher valuation (P/E of 35.38), this is partly due to its strong growth and profitability. For more details on the fundamentals, see the full fundamental analysis report.

Technical Setup Indicates Possible Breakout

From a technical standpoint, ELF shows several positive signals:

• Upward Trend Momentum: Both short-term and long-term trends are positive, with the stock trading above key moving averages (50-day, 100-day, and 200-day SMAs).
• Trading Near Resistance: The stock has been moving between $105.25 and $132.48 over the past month, with recent price action testing resistance near $124.71. A move above this level could suggest further gains.
• Support Levels Offer Protection: Multiple support levels exist between $116.33 and $117.29, providing a potential stop-loss area for traders.

The technical rating of 8/10 reflects ELF’s strong performance compared to industry peers (outperforming 79%) and its favorable chart structure. For a closer look, review the technical analysis report.

Why This Pairing Works

Growth stocks with technical breakouts often draw momentum investors, as improving fundamentals can lead to continued price gains. ELF’s mix of:

• Growing market share in the clean beauty segment,
• Consistent earnings growth, and
• A technically sound setup

makes it an interesting choice for investors seeking high-growth opportunities with clear risk levels.

Find More Growth Stocks with Strong Setups

ELF was found using a screen for Strong Growth Stocks with Good Technical Setup Ratings. For other stocks meeting similar conditions, see the full screener results here.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.