6. e.l.f. Beauty Inc. (NYSE:ELF)
Number of Hedge Fund Holders: 40
Revenue Growth Rate (year-over-year): 76.89%
The multi-brand beauty company and one of the Best Beauty Stocks, e.l.f. Beauty, Inc. (NYSE:ELF) sells cruelty-free, vegan, clean, accessible, and inclusive cosmetics and skin care items. The company’s goal is for every eye, lip, face, and skin concern to have access to the best of beauty. Through its retail locations and online platforms, the company sells cosmetic accessories for women, such as eyeliner, mascara, false eyelashes, lipstick, face foundation, moisturizer, cleanser, and other supplies. The company sells products under the trademarks e.l.f. Cosmetics, W3LL PEOPLE, and Keys Soulcare. It sells both domestically and internationally, with the United States accounting for the majority of its revenue.
e.l.f. Beauty, Inc. (NYSE:ELF) was a huge success for a large portion of 2024, recording impressive growth and engaging Gen Z consumers seeking high-quality products at competitive prices. The company’s commitment to vegan and cruelty-free products appeals to the younger generation.
The company exceeded forecasts in the fiscal second quarter of 2025, with a 40% increase in revenue fueled by global expansion and online sales. The firm recorded gains in market share and sales for the 23rd straight quarter. Although e.l.f. Beauty, Inc. (NYSE:ELF) spends much on marketing and digital costs, along with some other operating expenses, it nevertheless has wide gross margins.
e.l.f. Beauty, Inc. (NYSE:ELF) secured the top spot in terms of unit share in the mass cosmetics industry in the United States after gaining 195 basis points in market share. Sales abroad increased by 91% YoY, and in Germany’s 1,600 Rossmann stores, the business emerged as the leading cosmetics brand. While the Beauty Squad loyalty program grew by 30% to reach 5.3 million members, digital engagement increased by over 40% year over year. The company increased its FY25 target to 28%-30% net sales growth, citing its excellent performance.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 769,200 shares worth $83.87 million as of Q3.
Polen U.S. Small Company Growth Strategy stated the following regarding E.l.f. Beauty, Inc. (NYSE:ELF) in its Q3 2024 investor letter:
“The Portfolio’s top detractors were Progyny, elf Beauty, and Alarm.com. E.l.f. Beauty, Inc. (NYSE:ELF), a discount beauty company focused on cosmetics and skincare, is a new addition to the Portfolio this quarter. Please see Portfolio Activity below for further detail. We are intrigued by the company’s impressive track record for growth, margins, and returns on capital. While elf has reported significant results all year, shares came under pressure, in our view, as short-term investors primarily appeared to anticipate a slowdown in revenue growth, possibly due to investor concerns of market saturation, economic conditions, and valuation concerns, among other factors. While we are confident in how we underwrote our initial investment for returns above the portfolio average, the stock has come under even more pressure than we anticipated. We used this weakness to add to our position. We’re intrigued by the strength elf has experienced across its retailer and ecommerce channels, particularly in taking market share in a challenging consumer environment, given their relatively inexpensive prices vs. competitors.
elf Beauty, described above, is a discount beauty company focused on cosmetics and skincare. We find the company’s reputation for quality, innovation, and prices below mass cosmetics brands to be uniquely positioned. While this combination of innovation, quality, and value has led to compelling growth, we still believe it’s early days for the company. elf’s brand awareness is significantly less than that of more prominent players; it is still adding shelf space, expanding its product portfolio, and entering the skincare market. elf is also still a US-focused business, with some early signs of international success. The company’s financial profile is strong, and we expect EPS to grow by 25% over the long term.”
