e.l.f. Beauty Rallies on Rhode Momentum: Is It a Buy?

E.l.f. Beauty (ELF) shares surged 6.7% after the company reported fiscal first-quarter results that beat expectations and raised its full-year outlook. The growth was led by a better-than-expected performance from its Rhode brand, which e.l.f. acquired in August 2025. Rhode contributed $160 million in sales, including a record $27 million in a single day from its website following a summer product launch.

Overall, e.l.f. Beauty's sales jumped 36% year over year to $479.4 million, easily topping the analyst consensus of $430 million. Adjusted earnings per share (EPS) nearly doubled from $0.89 to $1.75, but that included a tariff refund. Excluding the refund, adjusted EPS was $1.07, a 20% increase, still crushing the $0.71 consensus. Adjusted EBITDA soared 93% to $168 million, or up 36% excluding the tariff refund.

The company raised its full-year guidance across the board. It now expects revenue growth of 18% to 20%, up from a prior outlook of 12% to 14%. Adjusted EPS guidance was boosted to $3.50-$3.55, up from $3.27-$3.32. Adjusted EBITDA is now projected at $401 million-$407 million, up from $379 million-$385 million.

Organic growth, excluding the Rhode acquisition, was down in the high single digits. The company attributed this to lapping the launch of its popular e.l.f. Glo reviver melting lip balms and earlier shipping ahead of a software system switch. It also tested pricing on about 10% of its products, finding that most were priced correctly.

Rhode is currently in only 20% of Sephora stores globally and will enter 19 new European markets this fall. The company believes Rhode could reach $1 billion in yearly sales faster than any beauty brand ever has.

The strong Q1 results and raised guidance signal that e.l.f. Beauty's growth strategy is working. The Rhode acquisition is proving to be a major success, with the brand contributing significantly to sales and showing potential for further expansion. The company's plan to increase Rhode's product assortment and distribution, including entering more Sephora stores and new European markets, provides a clear path for continued growth.

Additionally, e.l.f. is entering the hair care space, a $17 billion market in the U.S. that is growing faster than cosmetics and skin care. This new category extension, along with international expansion, could drive future revenue growth. The company also noted strong growth in skin care with its Naturium brand, which it calls the fastest-growing skin care brand among the top 50.

Despite the positive news, the stock is still down about 16% over the past year, though it's up more than 20% on the year. With a forward price-to-earnings ratio (P/E) of less than 25 based on next fiscal year's earnings estimates, the stock is at one of its cheaper valuation levels over the past few years. This suggests that the market may not be fully pricing in the growth potential.

Investors should consider the competitive landscape. The beauty industry is highly competitive, with major players like L'Oréal and Estée Lauder, as well as other indie brands. However, e.l.f.'s ability to consistently innovate and execute, as evidenced by its strong results, gives it a competitive edge.

The raised guidance also provides confidence in the company's ability to sustain momentum. Management's increased revenue and earnings expectations reflect their belief in the strength of their brands and growth initiatives. This is a positive signal for investors looking for growth opportunities in the consumer sector.