Tech stocks have often been a big draw for investors, especially those seeking growth. It's no surprise to see so many trend-following market participants jump onto the bandwagon of companies seeking to take advantage of technological advances. Indeed, the recent tech boom is one big reason parts of the stock market are higher on Thursday morning.
Yet if you focus solely on artificial intelligence stocks, you'll inevitably miss out on winners in other areas. Big gains in e.l.f. Beauty (ELF -6.24%) and Guess (GES -0.27%) have little if anything to do with AI, but they're still making shareholders happy. Take a closer look and see why these two consumer stocks are on the rise Thursday.
This stock looks just beautiful
Shares of e.l.f. Beauty were up 13% on Thursday morning. The maker of cosmetics and skin-care products released fiscal fourth-quarter financial results for the period ended March 31 that looked quite attractive themselves.
e.l.f. Beauty's numbers were outstanding. Net revenue soared 78% year over year to $187 million, with the company pointing to big gains in both its retail and e-commerce channels. A big jump in gross margin was also beneficial, and even though overhead expenses also soared, adjusted net income more than tripled to $23.8 million. That worked out to $0.42 per share, which was better than many had expected.
Moreover, e.l.f. Beauty expects the coming year to be favorable for its business as well. The beauty company projected sales of between $705 million and $720 million, which would be 22% to 24% higher than its final fiscal 2023 figures. Growth in adjusted net income could be more modest, but investors still liked e.l.f.'s projections for between $1.73 and $1.76 per share in adjusted earnings.
CEO Tarang Amin pointed to big gains in market share as an essential part of e.l.f. Beauty rising to become one of the top three cosmetics brands in the U.S. mass market. That's a critical milestone for e.l.f. Beauty, and Amin and the executive team all see a lot of potential ahead for the company in the months and years ahead.
Guess takes a step forward
Also posting big gains Thursday morning were shares of Guess, which rose 10%. The fashion brand posted fiscal first-quarter financial results for the period ended April 29 that showed the challenges facing the consumer economy but affirmed its ability to overcome weaker trends.
The numbers from Guess weren't entirely pretty. Revenue was down 4% year over year to $570 million, with particular weakness in the Americas offsetting gains in Europe and Asia. Guess posted an adjusted loss of $3.5 million, or $0.07 per share, reversing a healthy profit in the year-ago period.
Guess has faced a number of headwinds to start its new fiscal year. Costs for the apparel maker have risen, but consumers have lost the positive impact of stimulus payments that helped bolster their spending in the year-ago period. Moreover, Guess has had to mark down its merchandise to a greater extent in the current competitive environment, and that has weighed on its margin performance.
However, Guess sees the remainder of the year going well. It projected fiscal 2024 revenue to rise between 2% and 4%, with steadily increasing margins helping Guess to bring in between $2.60 and $2.90 per share in adjusted earnings for the year. That would signal a solid performance among consumers and be a good sign not just for Guess but for consumer stocks more broadly.
