Shares of cosmetics company e.l.f. Beauty (ELF -3.90%) made a big move higher on Thursday after the company reported financial results for its fiscal fourth quarter of 2024. As of 10 a.m. ET, e.l.f Beauty stock was up a strong 14%.
Mastering market-share growth
In its fiscal 2024 (ending in March), e.l.f Beauty generated net sales of over $1 billion, which represents remarkable 77% year-over-year growth. The company appears to have mastered the art of using social media to grow brand awareness, and it's paid off with five straight years of market-share gains.
Shares of e.l.f Beauty wobbled in after-hours trading yesterday, in contrast to the big gains this morning. While investors are encouraged with growth, some are already looking ahead to its fiscal 2025. For this upcoming fiscal year, management is only guiding for about 21% top-line growth.
For some, the slowing growth rate for e.l.f Beauty is a problem. However, 21% growth is still quite good and points to a sixth year of market share gains, which is why investors are more excited than cautious today.
What's next for e.l.f Beauty?
I could see e.l.f. Beauty stock cooling down for a spell. With management's full-year guidance, it expects adjusted earnings per share (EPS) of $3.20 to $3.25. For perspective, it just reported full-year adjusted EPS of $3.18.
So top-line growth is expected to slow, and adjusted profits are supposed to be essentially flat year over year. Therefore, it's possible that investors won't be as excited in this coming fiscal year as they have been in the past.
That said, I see reason for e.l.f. Beauty's shareholders to continue holding. Growth is never a straight line -- it ebbs and flows. And management seems to understand viral marketing better than its peers, which is an important strength in the cosmetics space with a relatively low barrier to entry.
