Rhode Is Fueling e.l.f.'s Latest Surge. Is It Time to Jump In?

E.l.f. Beauty (NYSE: ELF) shares surged after the cosmetics and skin care company reported strong fiscal first-quarter results and lifted its full-year outlook. The growth was led by a better-than-expected performance from its Rhode brand, which e.l.f. acquired in August of 2025.

The stock is up more than 20% on the year, but it's still down about 16% over the past year.

Let's take a closer look at e.l.f's results and prospects and why I think the stock's momentum can continue.

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Rhode leads the way

Rhode once again was a standout for e.l.f. in the quarter, contributing $160 million in sales. This included the brand scoring a record $27 million in sales from its website in a single day following the launch of new summer products. The company thinks Rhode could reach $1 billion in yearly sales faster than any beauty brand ever has.

The company is seeing record demand for Rhode products, helped by expanded product assortment, a launch at LVMH Moet Hennessy Louis Vuitton's Sephora stores, and overseas expansion. Rhode is currently in only 20% of Sephora stores globally and will be entering 19 new European markets this fall.

Organic growth, excluding its acquisition of Rhode, was down in the high single digits. The company said this stemmed from the lapping of the launch of its popular e.l.f. Glo reviver melting lip balms and the fact that it shipped products out earlier a year ago ahead of switching enterprise resource software systems, which manage internal operations such as finance and supply chain. The company also tested e.l.f. brand pricing in the quarter, determining that about 10% of its products could benefit from lower prices but that the vast majority were priced correctly.

One of the brand's big growth initiatives moving forward is entering the hair-care space. It launched six products in the category in June at Target and sees this as a $17 billion market in the U.S. that is growing faster than cosmetics and skin care. Meanwhile, it said it continues to see strong growth in skin care with both its namesake brand and Naturium. It called Naturium the fastest-growing skin care brand among the top 50 brands.

Overall, for fiscal Q1 (ended June 30), e.l.f. Beauty sales jumped 36% year over year to $479.4 million, easily topping the analyst consensus of $430 million compiled by London Stock Exchange Group.

Adjusted earnings per share (EPS), meanwhile, nearly doubled from $0.89 to $1.75, but included a traffic refund. Excluding the traffic refund, adjusted EPS would have been $1.07, a 20% increase. That still crushed the $0.71 analyst consensus. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) soared 93% to $168 million and were up 36% excluding the tariff refund. Gross margin, excluding the tariff refund, rose 350 basis points.

Looking ahead, e.l.f. raised its full-year guidance across the board. It now expects revenue to grow between 18% and 20% to $1.938 billion-$1.968 billion, up from a prior outlook of $1.835 billion-$1.865 billion, or growth of 12% to 14%. It said the improved forecast comes from the momentum it is seeing across its brands.

It also boosted its adjusted EPS guidance to $3.50-$3.55, up from an earlier forecast of between $3.27 and $3.32. Adjusted EBITDA is now projected to be between $401 million and $407 million, up from $379 million-$385 million.

Why the stock still looks like a buy

E.l.f. remains one of the best growth stocks in the consumer space, in my view. The Rhode acquisition is going well, and the brand's growth drivers are still in the early innings. Increasing Rhode's product assortment and expanding its distribution were always the best ways to grow the brand, and the company is executing on this strategy at the controlled pace you'd like to see. Sephora will ultimately be the first step, and e.l.f. still has a long runway to get into more of Sephora stores. Meanwhile, its summer launch showed the pent-up demand for a wider Rhode product assortment.

In addition, I really like the move of the e.l.f. brand into the hair care space. This should be a nice growth driver, and I think other category extensions, like fragrance, could add other future growth levers. Meanwhile, the company still has a nice international expansion opportunity.

With a forward price-to-earnings ratio (P/E) of less than 25 based on next fiscal year's earnings estimates, e.l.f. is at one of its cheaper valuation levels over the past few years and should have plenty of room to run from here.

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 London Stock Exchange Group Plc, Lvmh Moët Hennessy-Louis Vuitton, Société Européenne, and e.l.f. Beauty. The Motley Fool has a disclosure policy.