Buy Elf Beauty, Avoid HP
After Ulta Beauty (ULTA) posted strong results, shares rose. Similarly, e.l.f. Beauty continued its uptrend after it posted fiscal fourth-quarter results.
Elf earned $0.78 a share (non-GAAP). Revenue increased by 3.6% Y/Y to $332.65 million. The firm did not provide its financial outlook for the fiscal year. It cited the wide range of potential outcomes associated with tariffs as the reason.
ELF stock still rose after the report and the $1 billion acquisition announcement. It is buying Rhode. This is a beauty brand founded by Hailey Rhode Bieber. The firm described Rhode as a breakthrough in the “high growth beauty brand.” The brand achieved $212 million in net sales in the last year. It used direct-to-consumer channels.
Elf’s expensive purchase of Rhode may hurt margins. Competition is intensifying, so Rhode, founded in 2022, may lose its sales momentum.
In the computing and printing market, HP Inc. (HPQ) is not appealing. Value investors risk watching HPQ stock re-test the $21.21 low. On May 28, HP posted a 3.1% Y/Y increase in revenue, to $13.2 billion. For fiscal 2025, HP is forecasting a GAAP EPS in the range of $2.32 to $2.62.
HP is aiming to find $2 billion in savings. CEO Enrique Lores said that the company could not mitigate additional tariff costs in the quarter. It took a $0.12 EPS impact from it. Looking ahead, it will adjust its pricing, cost actions, and manufacturing footprint.
