The e.l.f. Beauty story

What drives the business

• e.l.f. Beauty’s core model combines accessible pricing, frequent product innovation and digital marketing, with e.l.f. Cosmetics averaging approximately $7 per product in the United States versus $10 for other leading mass cosmetics brands and $30 for prestige brands.
• Its expansion into skincare includes rhode and Naturium, acquired for $898 million and $333 million, respectively, alongside e.l.f. SKIN and Well People.
• Retail relationships anchor distribution: the largest customer accounted for 18% of net sales in the fiscal year ended March 31, 2026, followed by Walmart at 13%, Amazon at 11% and Sephora at 10%.
• Marketing and digital expenses totaled $399.8 million, approximately 24% of net sales, in the fiscal year ended March 31, 2026, supporting a strategy focused on younger consumers and digital engagement.
• Net sales grew 36% to $479.4 million in the quarter to June 2026, with growth across retailer and e-commerce channels in both the United States and international markets.

What the price assumes

At $101.80, the reverse DCF implies free cash flow after stock pay growing 14.0% annually for ten years, using a 10.2% discount rate.

That compares with delivered growth of 13.2% annually over the last 3 fiscal years and the TenQ check’s 8.6% bar, which slows the historical record halfway toward 4%.

The implied growth requirement exceeds both comparisons, while free cash flow over the last twelve months was $280 million before accounting for $97 million of stock-based pay.

Value ELF on your own assumptions

What could change the story

• The tariff refund benefit complicates comparisons with ongoing profitability, and manufacturing concentrated primarily in China leaves the cost structure exposed to tariff changes.
• Operating expenses can absorb strong product demand: selling, general and administrative expenses increased $84.5 million to $280.3 million in the quarter to June 2026, reflecting higher marketing, merchandising, distribution and other costs.
• Over the last twelve months, revenue growth of 31.2% trailed the three-year annual pace of 41.4%, while profit growth was -39.1%, failing the TenQ checks for accelerating growth and rising profits.
• Higher debt adds pressure to earnings coverage of interest, which measured 3.41 against the TenQ check’s 5.00 bar.
• Major retail customers have no obligation to continue purchasing products, and changes in their holiday orders or shelf resets can materially affect sales and liquidity.

What to watch next

• The raised fiscal 2027 outlook calls for net sales of $1,938-1,968 million, representing 18-20% growth, and adjusted EBITDA of $401-407 million.
• Subsequent releases will show whether pricing and lower tariff rates support gross margin apart from refunds, and whether expense growth moderates relative to revenue.
• Rhode’s revenue performance, further earnout adjustments and the movement of debt relative to cash will help distinguish brand momentum from its financial costs.

Sources

• e.l.f. Beauty's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The ELF stock report, for every figure and check