It’s been a rollercoaster ride since beauty elf (ELF -2.10%) in 2024. The stock jumped more than 50% in the first half before plunging more than 50% a few months later. And since reporting second-quarter fiscal 2025 results on Nov. 6, the stock has surged more than 25% as management once again raised its full-year guidance.

Let’s take a closer look at the cosmetics company’s most recent results and outlook to see if now is a good time to buy the stock.

Sales continue to increase

For its fiscal second quarter, ended September 30, elf Beauty’s sales soared 40% year over year to $301.1 million, well above analysts’ consensus of $286 million. (as compiled by LSEG). He said the retail channel and e-commerce were strong.

Adjusted earnings per share (EPS), meanwhile, rose from $0.82 to $0.77, but easily beat analysts’ estimate of $0.43. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 9% to $146.8 million.

Profitability was affected by increased costs of marketing and supporting its business.

Elf Beauty further improved its market share during the quarter with a gain in the color cosmetics category of 195 basis points to 12%, according to Nielsen. However, the 16% consumption growth in the tracked chains was lower than the expected 20% growth, with the category as a whole seeing a 5% decline. He attributed the category’s weakness to customers being more selective in their spending.

The company continues to experience rapid international growth with revenue up 91% year over year. It entered the German market during the quarter through Rossmann stores and said it quickly became the No. 1 brand in the stores it entered.

Raised guide

Elf has again raised its guidance for fiscal 2025, with sales now expected to increase 28% to 30%, compared to a previous expectation of 25% to 27%.

Data source: Elf Beauty.

It also raised its profitability guidance, with adjusted EBITDA now expected in the range of $304 million to $308 million and adjusted EPS of $3.47 to $3.53.

Management believes marketing leverage will improve in the fiscal fourth quarter as its expenses are more balanced this year. The company also said that possible customs duties would not have an impact on its current financial year.

Elf pointed out that the last time it faced increased tariffs, it managed to secure concessions from its suppliers, while raising prices on a third of its product portfolio. . Around 80% of its products currently come from China, which also allows it to diversify its supply chain.

Is Elf Stock a Buy?

Elf has been one of the best growth stories in consumer products in recent years. It has taken the mass cosmetics category by storm, claiming significant market share from legacy brands. This trend has been fueled by a combination of more affordable products and the use of influencers to attract younger customers.

At the same time, the company has growth opportunities both internationally and in the adjacent skincare category. Internationally, the company has enjoyed great success. At the same time, it acquired the skin care brand Naturium in October 2023 to strengthen its presence in this market. Ultimately, it could also decide to enter other categories such as perfumes.

As for valuation, Elf trades at a forward price/earnings ratio (P/E) of 31 times based on estimates for fiscal 2026. This is price/earnings/growth ratio (PEG ratio) is just 0.6 with a PEG below 1 generally considered undervalued. And growth stocks often command much higher PEG multiples.

Data by Y Charts.

Although there are some concerns about the impact of potential tariffs on the business, elf has already faced such challenges while continuing to grow its sales and market share.

Right now, Elf’s valuation is very attractive for what still appears to be one of the best growth stocks in the consumer sector. As such, I would be a buyer of the stock today.