Following the recent announcement revising its 2025 earnings guidance and third-quarter earnings report, e.l.f. Beauty experienced a 15% decline in its share price over the last week. The company reported a robust 31% increase in sales but saw net income decrease to $17 million from $27 million the previous year, indicating pressure on profitability despite higher revenues. Lowering future sales expectations further fueled investor concerns. Additionally, the broader market also faced a 2.5% drop due to economic uncertainty from new U.S. tariffs on major trade partners, negatively impacting sectors like retail and technology, which contributed to the downward pressure on stock prices. These market conditions and company-specific factors likely contributed to ELF's stock performance, aligning it with the disadvantaged market sentiment, including Best Buy's 15% decline related to similar tariff concerns.

Take a closer look at e.l.f. Beauty's potential here.

Over the past five years, e.l.f. Beauty has achieved a substantial total return of very large 354.49%, reflecting strong long-term performance. This period saw the company become profitable, with earnings growing by a significant 52.6% annually. A key development during this time was the announcement of a substantial US$500 million share buyback program, although no shares were repurchased in the latest tranche. This move often indicates management's confidence in the company's prospects and can positively impact shareholder returns.

Additionally, e.l.f. Beauty's expansion into new markets, such as its entry into Sephora in Mexico, exemplifies its growth initiatives aimed at broadening its market presence. Despite current challenges, the company's anticipated earnings growth remains notably high, projected to outpace the broader US market both currently and in future expectations. However, despite the company's high growth, its recent underperformance against the industry's 1-year return indicates market pressures amid economic uncertainties.

• Learn how e.l.f. Beauty's intrinsic value compares to its market price with our detailed valuation report.
• Explore the potential challenges for e.l.f. Beauty in our thorough risk analysis report.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NYSE:ELF.

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