Peeling Off the Mask: When the Beauty Industry Turns Unsightly (ELF)

Today’s fruit is fresh-picked and straight to your crisper.

Enjoy…

LET’S GET IT DONE!

Straight to the chase, with square-jawed, military forthrightness!

Okee-dokey.

The company under the scope today is e.l.f. Beauty Inc. (NYSE:ELF)—nothing so arrogant and grandiose, don’tcha know, as those who go with the lower case…

Anyway, these scumbags who prey on women’s insecurities make hundreds of millions selling cosmetic and skin care products.

And their stock price reflects it.

But we’re of the opinion that the most recent run-up is complete, and the stock’s strength is no more than a whipped clay, detox face mask.

Why?

Simple: the stock outran its earnings estimates—even the updated, hyper-excited, post-earnings forecasts of the last 30 days.

The company had a good quarter, we’ll give them that.  But how much mascara can you lay on an industry that’s among the first to go south when consumers rein in their discretionary spending.

We’ve got a winter of hell approaching, sister…

Here’s what the fundamentals look like—

• P/E is 82.67, a number that’s so far plucked from the eyebrow truth that even Wall Street sees it plummeting to 42.49 a year from now.  That is, half the stock price or twice the earnings—take your pick.
• No dividend to speak of.
• Price to Book is a smudged 7.58.
• And maybe most important, insiders have sold almost half their holdings (48.80%) over the last six months.  Total withdrawal in excess of $40 million, with $9 million siphoned off in just the last month.

The wise ones will do according to their wisdom.

Now look at the chart—

Stay with us, good Jews and Noahides. 

And pray like the holy people you were always meant to be.

Many happy returns!

Matt McAbby

Follow @HughLOHaynew