Buffett Brain · Research note
Score updated 27 Oct 2026 · analysis from 31 May 2026
ELF· Consumer Staples
e.l.f. Beauty
e.l.f. Beauty's strong gross margin of 70% is impressive, but its low ROIC of 5.7% raises concerns about long-term durability.
Buffett fit
Partial fit
Owner
42
Durability
91
Management
76
Price
51
Score updated 27 Oct 2026 · analysis from 31 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned 100% of e.l.f. Beauty, I'd focus on expanding distribution and enhancing brand loyalty.
The full reasoning comes with a free account.
The 10-year test shows e.l.f. has been profitable in all five years and has a strong EPS CAGR of 97.8%.
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Management has increased the share count by 3.29% over five years, which is a concern for long-term shareholder value.
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With an yield of 3.54% and a of 31.5, the valuation appears stretched.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 70.3% sits in the top quintile for the Consumer Defensive sector (p80: 54.1%).
- 2Revenue CAGR of 42.55% over the last five years indicates strong growth potential.
- 3 of $115.32 million aligns well with net income of $112.09 million, showing high earnings quality.
- 4Interest coverage ratio of 6.2 suggests the company can comfortably meet its interest obligations.
Concerns
5- 1 of 5.7% is below the sector's top-quintile cutoff of 10.9%, raising durability concerns.
- 2 of 11.1% is below the sector's top-quintile cutoff of 13.2%, indicating potential pricing pressure.
- 3Net debt/EBITDA of 3.03 suggests higher compared to ideal levels, which could impact financial health in downturns.
- 4Share count CAGR of 3.29% dilutes existing shareholders, countering the benefits of growth.
Price history
$113+249.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
e.l.f. Beauty generates revenue primarily through direct-to-consumer channels and retailers, achieving $1.31 billion in TTM revenue. Their product line includes cosmetics and skincare, with a of 70.3%, indicating strong unit economics. This allows for significant reinvestment in growth.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 27, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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