Can Brand-Led Innovation Sustain ELF's Growth Momentum in FY26?

Brand-led innovation is emerging as a critical driver of e.l.f. Beauty Inc.’s ELF growth momentum in fiscal 2026, enabling the company to outperform a slow-growing mass beauty category. In the second quarter of fiscal 2026, e.l.f. Beauty delivered 14% net sales growth, well ahead of the roughly 2% year-over-year growth in the U.S. mass cosmetics and skin care market, underscoring the strength of brand-driven consumer demand.

A key pillar of this performance is e.l.f. Beauty’s ability to convert prestige-inspired concepts into accessible, high-value products. Power Grip Primer has become the top-selling SKU in the U.S. cosmetics category. On a consumption basis, the e.l.f. Beauty brand grew approximately 7% in the second quarter, generating 140 basis points of market-share gains and extending its long track record of consistent share expansion.

The acquisition of Rhode adds another layer to e.l.f.’s brand-led growth model. Rhode’s successful Sephora launch and strong social media presence show its cultural appeal, and its premium image fits well with e.l.f. Beauty’s affordable brand. Management expects Rhode to boost ELF’s growth in fiscal 2026 while maintaining healthy profit margins, supported by targeted marketing and infrastructure investments.

e.l.f. Beauty invests about 24%-26% of net sales in marketing and digital engagement. Over the past five years, unaided brand awareness in the United States has increased from 13% to 45%, while awareness in Canada and the U.K. has risen to 26% and 19%, respectively, supporting international scalability.

Looking ahead, brand-led innovation positions e.l.f. Beauty to sustain momentum through fiscal 2026 despite tariff pressures and shipment timing headwinds. Management expects full-year net sales growth of 18%-20%, with organic growth of 3%-4% excluding acquisitions. With 75% of the portfolio still priced at $10 or below after a $1 price increase, e.l.f. Beauty’s innovation-led value proposition remains a durable growth driver.

NUS & COTY’s Brand Strategy as ELF Expands Innovation

Nu Skin Enterprises’ NUS brand strategy is shifting toward intelligent beauty and wellness, anchored by innovation-led platforms such as Prysm iO and expansion into emerging markets. Nu Skin is leveraging its science-backed devices, wellness subscriptions and localized portfolios to reignite growth. Nu Skin delivered strong margins and sequential regional improvement despite revenue pressure, with Latin America and wellness initiatives driving brand performance.

Coty Inc.’s COTY brand strategy centers on strengthening prestige fragrances while expanding ultra-premium and entry formats. Coty is prioritizing high-growth brands such as Burberry, Hugo Boss, Chloe and Marc Jacobs, which delivered strong multi-year growth, while building new ultra-luxury lines. Coty continues to outperform the fragrance market, supported by innovation, disciplined portfolio diversification and global brand momentum.

e.l.f. Beauty’s Price Performance, Valuation & Estimates

ELF has seen its shares decline 35.5% in the past six months against the industry’s growth of 12.7%.

e.l.f. Beauty’s forward 12-month price-to-earnings ratio of 22.47 reflects a lower valuation than the industry’s average of 28.40. ELF has a Value Score of D. 

The Zacks Consensus Estimate for ELF’s fiscal 2026 earnings implies a year-over-year decline of 13.6%, while the same for fiscal 2027 indicates growth of 27.3%. Earnings estimates for both fiscal 2026 and 2027 have been unchanged in the past 30 days.

e.l.f. Beauty currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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