The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how e.l.f. (NYSE:ELF) and the rest of the personal care stocks fared in Q2.
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.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, personal care stocks have held steady amidst all this with share prices up 1.5% on average since the latest earnings results.
e.l.f. (NYSE:ELF) e.l.f. Beauty (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 print exceeded analysts’ expectations by 6.6%. Overall, it was a solid quarter for the company with an impressive beat of analysts’ earnings estimates.
“We are off to a strong start this fiscal year, delivering 50% net sales growth and 260 basis points of market share gains in Q1,” said Tarang Amin, e.l.f.
e.l.f. scored the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 20.2% since reporting and currently trades at $150.07.
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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%. It was a very strong quarter for the company with an impressive beat of analysts’ gross margin estimates and a solid beat of analysts’ earnings estimates.
The Honest Company delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 35.6% since reporting. It currently trades at $4.40.
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 weak quarter for the company with revenue guidance for next quarter missing analysts’ expectations.
BeautyHealth posted the weakest performance against analyst estimates and weakest full-year guidance update in the group. Interestingly, the stock is up 53.5% since the results and currently trades at $1.98.
Edgewell Personal Care (NYSE:NYSE:EPC) Boasting brands such as Banana Boat, Schick, and Skintimate, Edgewell Personal Care (NYSE:EPC) sells personal care products in the skin and sun care, shave, and feminine care categories.
Edgewell Personal Care reported revenues of $647.8 million, flat year on year, in line with analysts’ expectations. Revenue aside, it was a mixed quarter for the company with a solid beat of analysts’ earnings estimates but a miss of analysts’ organic revenue growth estimates.
The stock is up 6.7% since reporting and currently trades at $40.15.
Nu Skin (NYSE:NYSE:NUS) With person-to-person marketing and sales rather than selling through retail stores, Nu Skin (NYSE:NUS) is a personal care and dietary supplements company that engages in direct selling.
Nu Skin reported revenues of $439.1 million, down 12.2% year on year, surpassing analysts’ expectations by 1.7%. Revenue aside, it was a weaker quarter for the company with underwhelming earnings guidance for the next quarter and a miss of analysts’ gross margin estimates.
Nu Skin delivered the highest full-year guidance raise among its peers. The stock is down 10.5% since reporting and currently trades at $9.28.
This content was originally published on Stock Story
