ELF vs. EL: Which Beauty Stock Looks More Attractive Now?

Core Insights - e.l.f. Beauty and Estée Lauder represent contrasting segments of the beauty market, with e.l.f. being a fast-growing mass-market player and Estée Lauder a large prestige company undergoing a cyclical recovery [1] Company Overview - e.l.f. Beauty focuses on affordable pricing, rapid product launches, and strong social media engagement, with brands like e.l.f. Cosmetics and Naturium [2] - Estée Lauder is a global leader in prestige beauty, offering a diversified portfolio across various categories, including skincare and makeup, supported by a broad distribution network [2] Market Position and Strategy - e.l.f. Beauty has a market capitalization of approximately $4.76 billion and is gaining market share through value-driven innovation [3] - Estée Lauder, with a market capitalization of $38.7 billion, is focused on stabilizing sales and rebuilding margins through its Beauty Reimagined strategy [3] Competitive Advantages - e.l.f. Beauty's competitive edge lies in its digitally native marketing approach, leveraging social media and influencer campaigns to drive product discovery while maintaining low advertising costs [5] - Estée Lauder benefits from a strong global prestige beauty portfolio, with flagship brands that support long-term demand despite industry volatility [11] Financial Performance - The Zacks Consensus Estimate for e.l.f. Beauty suggests a 19.2% year-over-year increase in sales for the current fiscal year, while earnings are expected to decrease by 15.9% [16] - For Estée Lauder, the consensus estimates imply a 4.5% increase in sales and a 42.4% increase in earnings for the current fiscal year [19] Stock Performance - Over the past year, e.l.f. Beauty shares have decreased by 39.1%, while Estée Lauder shares have increased by 43.3%, outperforming the industry's growth of 8.6% [21] Valuation - e.l.f. Beauty trades at a forward price-to-earnings multiple of 23.71, which is below its median level and the industry's multiple [22] - Estée Lauder has a higher forward P/E of 42.48, indicating a more expensive valuation compared to e.l.f. Beauty [22] Investment Outlook - e.l.f. Beauty's strong brand momentum and value-focused growth model are notable, but Estée Lauder's diversified business and recovery potential make it a more attractive choice at this stage [25]