What happened

Shares of e.l.f. Beauty, Inc. (NYSE:ELF) stock are down 11.5% as of 11:00 a.m. EST. This is despite the fact that the cosmetics manufacturer released Q4 and full-year 2017 earnings last night, beating earnings soundly -- and beating its own estimates besides.

e.l.f. reported GAAP earnings of $0.44 per share in its fiscal fourth quarter. Adjusted for one-time items, earnings were $0.26 per share. Either way you look at it, though, e.l.f. danced right past Wall Street predictions for a mere $0.17 per share in profit.

Makeup brushes and powders on white wooden table

Image source: Getty Images.

So what

e.l.f. also appears to have exceeded expectations for the year. Last month, e.l.f. told investors that it was expecting to end fiscal 2017 with sales growth of 17% in comparison to 2016 sales. Instead, e.l.f. reported last night that its sales grew 18%, to $270 million, while expanding its gross profit margin by 3 full percentage points, to 61%.

The company earned $0.68 per share -- GAAP -- for the full year, versus last year's GAAP loss.

Now what

So why are e.l.f. shares getting bewitched this morning? Guidance may be playing the villain in this story.

In January, e.l.f. had told investors that it hoped to grow sales by between 10% and 15% annually over the 2016 to 2019 period. For 2018 in particular, though, management now believes 6% to 8% growth is more likely. e.l.f. is predicting this year will see sales grow to between $286 million and $291 million. Worse, adjusted profits will decline by 5%-8%, to somewhere between $0.59 and $0.61 per share.

Granted, that lines up well with Wall Street's profits expectation for this year (the Street is predicting $0.59). It falls far short, however, of analyst expectations for more than $299 million in sales.

And that, dear reader, is why investors don't believe in e.l.f. today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends e.l.f. Beauty, Inc. The Motley Fool has a disclosure policy.