e.l.f. Beauty's Stunning Earnings Report Failed to Dazzle Wall Street in After-Market Trading
e.l.f. Beauty Inc. (ELF) - Get Report just reported a stunning earnings report, but Wall Street is not entirely dazzled.
In after-hours trading, the stock was at $25.17, down 1.45%, likely because the company simply reiterated, but did not raise, its 2017 guidance for a 24% to 28% net sales growth. Wall Street prefers when companies raise their outlook.
After the market close on Wednesday, Aug. 9, the cosmetics company reported second-quarter earnings of 12 cents per diluted share, slamming Wall Street's estimates for earnings of a scant 3 cents a share. E.l.f.'s net sales rose 27% to $55.9 million and an over 700 basis point expansion in gross margin, compared to the $55.7 million, which analysts surveyed by Factset expected.
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In the three months ended June 30, e.l.f. said its gross margin expanded 64% from 57% in the year-ago period, primarily because of margin accretive innovation, improvements in both customer terms and freight costs, and benefits from foreign exchange rates. The company's selling, general and administrative expenses increased to 59% of net sales in the second quarter, from 56% last year.
"Our performance continues to demonstrate the successful execution of our mission to make luxurious beauty accessible for all," Tarang Amin, chairman and CEO of e.l.f., said in a statement.
For the six months through June 30, e.l.f. reported revenue increased 20% to $116.4 million and posted earnings of 21 cents per diluted share.
In a recent interview with TheStreet founder Jim Cramer, who also manages the Action Alerts PLUS charitable trust portfolio, Amin said e.l.f. is using machine learning to gauge the 130,000 product reviews on the company's website, helping it to launch 21 new products this past quarter alone.
Amin also touted, in the interview, retailers Target Corp. (TGT) - Get Report , Walmart Stores Inc. (WMT) - Get Report and Ulta Beauty Inc. (ULTA) - Get Report for driving sales.
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