Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Olaplex (NASDAQ:OLPX) and its peers.
While personal care products products may seem more discretionary than food, consumers tend to maintain or even boost their spending on the category during tough times. This phenomenon is known as "the lipstick effect" by economists, which states that consumers still want some semblance of affordable luxuries like beauty and wellness when the economy is sputtering.
Consumer tastes are constantly changing, and personal care companies are currently responding to the public’s increased desire for ethically produced goods by featuring natural ingredients in their products.
The 13 personal care stocks we track reported a slower Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 14.6% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Amidst this news, personal care stocks have had a rough stretch. On average, share prices are down 10.5% since the latest earnings results.
Olaplex (NASDAQ:OLPX)
Rising to fame on TikTok because of its “bond building" hair products, Olaplex (NASDAQ:OLPX) offers products and treatments that repair the damage caused by traditional heat and chemical-based styling goods.Olaplex reported revenues of $103.9 million, down 4.8% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a miss of analysts’ gross margin and earnings estimates.
Amanda Baldwin, OLAPLEX’s Chief Executive Officer, commented: "Our second quarter performance was in line with our expectations and demonstrated continued stabilization in the business. I am encouraged by the progress we are making on our transformation journey as we delivered on our goals for the first half of the year and are now shifting our focus to the back half of 2024 and beyond. I am confident in the direction we are taking the brand and remain incredibly excited about the long-term growth potential for OLAPLEX."
Interestingly, the stock is up 21.5% since reporting and currently trades at $2.23.
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Best Q2: The Honest Company (NASDAQ:HNST)
Co-founded by actress Jessica Alba, The Honest Company (NASDAQ:HNST) sells diapers and wipes, skin care products, and household cleaning products.The Honest Company reported revenues of $93.05 million, up 10.1% year on year, outperforming analysts’ expectations by 6.8%. The business had an exceptional quarter with an impressive beat of analysts’ earnings estimates.
The Honest Company scored the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 5.7% since reporting. It currently trades at $3.43.
Weakest Q2: BeautyHealth (NASDAQ:SKIN)
Operating in the emerging beauty health category, the appropriately named BeautyHealth (NASDAQ:SKIN) is a skincare company best known for its Hydrafacial product that cleanses and hydrates skin.BeautyHealth reported revenues of $90.6 million, down 22.9% year on year, falling short of analysts’ expectations by 8.1%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
BeautyHealth delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 24% since the results and currently trades at $1.60.
e.l.f. (NYSE:ELF)
e.l.f. Beauty (NYSE:NYSE:ELF), which stands for ‘eyes, lips, face’, offers high-quality beauty products at accessible price points.e.l.f. reported revenues of $324.5 million, up 50% year on year. This result surpassed analysts’ expectations by 6.6%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ earnings estimates and a decent beat of analysts’ operating margin estimates.
e.l.f. achieved the fastest revenue growth among its peers. The stock is down 45.7% since reporting and currently trades at $101.99.
Inter Parfums (NASDAQ:IPAR)
With licenses to produce colognes and perfumes under brands such as Kate Spade, Van Cleef & Arpels, and Abercrombie & Fitch, Inter Parfums (NASDAQ:IPAR) manufactures and distributes fragrances worldwide.Inter Parfums reported revenues of $342.2 million, up 10.7% year on year. This print surpassed analysts’ expectations by 1.3%. Aside from that, it was a satisfactory quarter as it also produced a decent beat of analysts’ gross margin estimates but full-year revenue guidance missing analysts’ expectations.
The stock is down 5.6% since reporting and currently trades at $123.
This content was originally published on Stock Story
