As you might know, Elf Beauty, Inc. (NYSE:ELF) just kicked off its latest first-quarter results with some very strong numbers. elf Beauty delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$123m, some 12% above indicated. Statutory EPS were US$0.27, an impressive 47% ahead of forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Elf Beauty
Taking into account the latest results, the current consensus from Elf Beauty’s eleven analysts is for revenues of US$457.7m in 2023, which would reflect a meaningful 9.6% increase on its sales over the past 12 months. Per-share earnings are expected to grow 13% to US$0.60. In the lead-up to this report, the analysts had been modeling revenues of US$441.5m and earnings per share (EPS) of US$0.56 in 2023. It looks like there’s been a modest increase in sentiment following the latest results, with the analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
With these upgrades, we’re not surprised to see that the analysts have lifted their price target by 12% to US$38.67 per share. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Elf Beauty, with the most bullish analyst valuing it at US$44.00 and the most bearish at US$35.00 per share. This is a very narrow spread of estimates, implying either that Elf Beauty is an easy company to value, or – more likely – the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to Elf Beauty’s past performance and to peers in the same industry. The analysts are definitely expecting Elf Beauty’s growth to accelerate, with the forecast 13% annualized growth to the end of 2023 ranking favorably alongside historical growth of 9.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue by 9.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Elf Beauty to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Elf Beauty’s earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believe the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn’t be too quick to come to a conclusion on Elf Beauty. Long-term earnings power is much more important than next year’s profits. We have forecasts for Elf Beauty going out to 2025, and you can see them for free on our platform here.
Don’t forget that there may still be risks. For instance, we’ve identified 1 warning sign for elf Beauty that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.