e.l.f. Beauty (ELF): Revisiting Valuation After Rhode Deal and Mixed Analyst Sentiment

When e.l.f. Beauty (ELF) wrapped up its $1 billion acquisition of Rhode earlier this month, it signaled a bold play for the premium skincare segment. Investors have been quick to weigh the risks. Recent analyst commentary has introduced both optimism and caution. While e.l.f. Beauty’s international revenue surge offers growth potential, concerns persist around softening US demand, ongoing tariff risks from Chinese manufacturing, and the strain a sizable deal like Rhode could place on the company’s finances, especially with a choppy market background and macro pressures such as rising inflation.

These factors have contributed to a turbulent period for e.l.f. Beauty’s stock price. Shares dipped over the past month, reflecting renewed anxiety about margins and broader market volatility, but their three-year climb remains notable. Momentum has faded somewhat this year as domestic sales showed only slight gains, even though market share and international distribution have improved. A combination of mixed fundamentals and cautious sentiment seems to have investors wondering about the true upside from this point.

As the dust settles from the Rhode deal and new risks take center stage, the question remains whether e.l.f. Beauty is trading at an attractive discount, or if the market has already priced in all the future growth.

Most Popular Narrative: 11.6% Undervalued

According to community narrative, analysts believe e.l.f. Beauty is trading below its estimated fair value. This view is based on robust growth projections and brand expansion efforts. Their assessment suggests investors may be underappreciating the company’s future earnings potential at current market prices.

The company is highly effective at leveraging influencer marketing, social media virality, and community-driven innovation. These strategies enable lower customer acquisition costs and highly efficient brand-building, supporting both top-line growth and sustainable net margin expansion.

Interested in what sets e.l.f. Beauty apart? The narrative’s bold forecast is powered by strategic expansion, rising margins, and a brand story that challenges industry norms. Want to see which future milestones could influence the stock price? Read further to explore the figures and assumptions behind this valuation perspective.

Result: Fair Value of $133.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent tariff pressures or delays in diversifying manufacturing could threaten margins and challenge the optimism that supports e.l.f. Beauty’s current valuation narrative.

Find out about the key risks to this e.l.f. Beauty narrative.

Another View: DCF Offers a Sharply Different Take

Looking through the lens of our DCF model, the story changes. Instead of focusing on earnings ratios, this approach estimates what e.l.f. Beauty’s future cash flows might be worth today and paints a far more optimistic picture. Which narrative will prove closer to reality as the market moves forward?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out e.l.f. Beauty for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own e.l.f. Beauty Narrative

If the narrative above does not match your perspective or you would rather dig into the data yourself, why not create your own view in just a few minutes and do it your way?

A great starting point for your e.l.f. Beauty research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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