Bear of the Day: e.l.f. Beauty (ELF)

Group 1 - e.l.f. Beauty has warned about slowing sales in January 2025, leading to a lowered fiscal full year 2025 guidance and a significant drop in shares [1] - The company reported fiscal third quarter 2025 earnings of $0.74, missing the Zacks Consensus estimate of $0.76, despite a 31% increase in sales to $355.3 million [2][4] - Gross margin increased by 40 basis points to 71%, attributed to favorable foreign exchange impacts, cost savings, and inventory adjustments, although offset by higher transportation costs [3] Group 2 - e.l.f. Beauty has revised its fourth quarter and full year guidance, now expecting a 27-28% year-over-year net sales increase, down from 28-30%, and lowering full year earnings guidance to $3.27 to $3.32 from $3.47 to $3.53 [4] - Analysts have cut their fiscal 2025 estimates, with the Zacks Consensus dropping from $3.60 to $3.33, indicating only 4.7% earnings growth over fiscal 2024 [5] - For fiscal 2026, estimates were also reduced, with the Zacks Consensus falling from $4.35 to $3.63, still reflecting a 9.1% earnings growth [6] Group 3 - e.l.f. Beauty shares have declined 54% over the last year, exacerbated by the lowered guidance, although they remain above the S&P 500's performance over the past five years [7] - The company, once a high-growth stock post-pandemic, now trades at a forward P/E of 21.9, which is still above typical value stock levels [8]