e.l.f. Stock Hasn't Given Investors a Lot to Cheer About Lately. Here's Why That Could Change.

E.l.f. Beauty (NYSE: ELF) hasn't given investors a lot to cheer about lately, with the stock down about 30% over the past year. However, that could be about to change as the company starts to rev up the growth of its recently acquired Rhode brand and expand its namesake brand into a new category.

Growth catalysts ahead

E.l.f. completed its $1 billion acquisition of Rhode last August. At the time of the deal, the high-end skincare line founded by celebrity Hailey Bieber had quickly grown to over $200 million in sales, offering just a handful of products on its website with little marketing outside of Bieber's own fame. E.l.f. is now in the process of ramping up Rhode's growth, which should help bring renewed interest to the stock.

Before its acquisition, Rhode had already entered an agreement to start being sold in LVMH's Sephora stores. Rhode saw strong success with its launch in U.S. and Canadian Sephora stores, but it has now started to expand overseas. After a highly successful debut at Sephora stores in the U.K. last September, e.l.f. will now expand the Rhode brand throughout Europe, both within Sephora stores and online. It also entered the Australia and New Zealand markets in February, and began offering its products direct to consumers in Mexico in June.

In addition to expanding internationally, Rhode has also started to expand its product assortment. With its Summer 2026 collection, the brand broadened its color cosmetic portfolio by entering the bronzer category while introducing other new items, like its Highlight Milk, its first-ever skin-prep, skin-finish crossover product. This follows an earlier move into spot treatment products, like pimple patches.

Image source: The Motley Fool.

Meanwhile, e.l.f. is also looking to make a big move with its namesake brand. After disrupting the mass-market cosmetics category, the company is now set to go after the hair care category. It said its research showed that 77% of its customers were interested in e.l.f. offering hair care products, and that two limited-edition products scored high marks with consumers. It will enter the category with a new marketing campaign with products including shampoo, conditioner, treatment oil, styling spray/cream, and a styling cream wand. The products will be sold at Target and through TikTok shops.

Between Rhode's increased product assortment and distribution and e.l.f.'s entry into hair care, the company should see strong growth in the coming years. Meanwhile, the stock looks like a bargain, trading at a forward P/E of less than 22 times fiscal 2028 (ending March 2028) analyst estimates. Overall, e.l.f. is a growth stock that looks ready to rally.

Geoffrey Seiler has positions in LVMH Moët Hennessy - Louis Vuitton and e.l.f. Beauty. The Motley Fool has positions in and recommends Target. The Motley Fool recommends Lvmh Moët Hennessy - Louis Vuitton, Société Européenne and e.l.f. Beauty. The Motley Fool has a disclosure policy.