Key Takeaways:
- ELF shares rose 18.8% in a week after Q1 fiscal 2027 net sales grew 36%
- Management raised fiscal 2027 net sales guidance to $1.938-$1.968 billion
- Rhode contributed $160 million in Q1 sales, but core e.l.f. organic sales declined
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ELF surges 18.8% on Rhode growth and raised fiscal 2027 outlook
e.l.f. Beauty shares advanced 18.8% in a week after first-quarter fiscal 2027 net sales rose 36 percent to $479.4 million and management raised guidance.
Management raised fiscal 2027 net sales guidance to $1.938-$1.968 billion, implying 18 percent to 20 percent growth, from a prior outlook of $1.835-$1.865 billion and 12 percent to 14 percent growth, according to the company's earnings release.
Rhode contributed about $160 million of first-quarter net sales, exceeding management's expectations. The brand's summer launch generated $27 million of direct-to-consumer sales in one day and attracted 90,000 new consumers, with more than 70 percent of launch-day sales from existing consumers. Adjusted earnings of $1.75 per share beat consensus by $1.03, while net sales of $479.4 million beat by $48.66 million. Adjusted earnings guidance rose to $3.50-$3.55 per share from $3.27-$3.32.
International net sales increased 61 percent in the quarter, ahead of 29 percent growth in the United States. Rhode is set to enter Sephora across 19 European countries in September, expanding a brand that remains in less than 20 percent of Sephora's global store base. The stock's weekly gain leaves it trading at 26.8 times forward earnings, above 20.7 times for the Zacks cosmetics sub-industry and 16.8 times for the Consumer Staples sector.
Organic net sales excluding Rhode declined at a high-single-digit rate in the first quarter, while companywide unit volumes reduced growth by about three percentage points. Management expects improving e.l.f. trends and raised fiscal 2027 organic net sales growth guidance to 6 percent to 7 percent.
The broader beauty market shows continued demand across channels. Ulta Beauty reported an 11.1 percent first-quarter fiscal 2026 net sales increase, with comparable sales rising 5.3 percent. The Estee Lauder Companies raised its fiscal 2026 organic sales outlook to about 3 percent in May, but its makeup net sales were virtually flat in the fiscal third quarter, illustrating uneven demand even among large beauty companies.
ELF carries a Zacks Rank #1 (Strong Buy) and a Growth Score of A, a combination that supports the near-term growth case. Its Value Score of F and Momentum Score of D are less favorable, while the VGM Score of C reflects a mixed overall profile. Those readings temper the growth signal and suggest investors should weigh the company's operating momentum against valuation and price-related characteristics.
The guidance raise shows management expects Rhode and international expansion to drive growth through fiscal 2027. Investors will watch Rhode's Sephora launch across 19 European countries in September for evidence that the brand's momentum extends beyond direct-to-consumer channels.
This article is for informational purposes only and does not constitute investment advice.
