Companies within the Zacks Cosmetics industry are navigating a rapidly evolving macroeconomic environment, characterized by rising external pressures that are softening consumer demand and weighing on overall sector performance. Persistent cost inflation and supply chain challenges are further impacting sales trends, while escalating production and operational expenses continue to strain profitability and operational efficiency.

Despite these challenges, companies like The Estee Lauder Companies Inc. ((EL Quick QuoteEL - Free Report) ), e.l.f. Beauty, Inc. ((ELF Quick QuoteELF - Free Report) ), Helen of Troy Limited ((HELE Quick QuoteHELE - Free Report) ) and European Wax Center, Inc. ((EWCZ Quick QuoteEWCZ - Free Report) ) look well-positioned, backed by their focus on enhancing digital capabilities and driving innovation.

About the Industry

The Zacks Cosmetics industry includes companies that provide beauty and personal care products. Players in the industry manufacture, distribute, sell and market skincare, fragrance, makeup and hair care products. Many firms in the market sell products via sales representatives, whereas some do the same through retailers, independent and chain drug stores and pharmacies, upscale perfumeries, department stores and beauty salons. These companies also operate through retailer websites, third-party distributors and in-flight and duty-free shops. Some products offered by industry participants include moisturizers, serums, toners and cleansers under skincare; perfume sprays, candles and soaps under fragrance; lipsticks, mascaras, powders, eye shadows, foundation and nail polishes under makeup; and shampoos, conditioners and hair color products under hair care.

Trends Shaping the Future of the Cosmetics Industry

Challenging Economic Conditions: The cosmetics industry is facing mounting challenges amid an increasingly uncertain economic environment. Ongoing trade tensions, reduced consumer spending and inconsistent retail restocking cycles are reshaping the beauty market. As living costs rise and household savings decline, consumers are prioritizing essential purchases and pulling back on discretionary spending, including cosmetics. This shift in behavior is dampening demand across many beauty brands. At the same time, operational costs are climbing due to higher prices for packaging materials, ingredients, logistics and promotional activities. These rising expenses are putting pressure on profit margins and heightening competition within the industry. Additionally, potential changes in trade policies or global supply chain disruptions could further increase costs and impact product pricing, adding further strain to cosmetic companies navigating a volatile and competitive landscape.

International Risk Factors: Cosmetic companies with a global presence are exposed to international risk factors, including unfavorable foreign currency fluctuations that can affect revenues and profitability. Geopolitical tensions and political instability may disrupt market access, hinder supply chain efficiency and affect overall operational continuity. Trade conflicts, tariffs, sanctions and other restrictions may also affect their performance.

Innovation & Digitization – Major Driver: Innovation and digitization are key growth drivers in the beauty and skincare market. Consumers are increasingly seeking unique products that combine advanced technology with expert scientific formulations. In response, cosmetic companies are continuously innovating and introducing new products. The rising consumer interest in organic and clean beauty products has fueled market growth. Enhancing e-commerce capabilities is a key priority, with advancements like virtual try-on tools, seamless digital payment systems and enhanced online marketing strategies gaining traction. In addition, many beauty brands are expanding their product portfolios through strategic acquisitions and partnerships to stay competitive in this rapidly changing industry.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Cosmetics industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #196, which places it in the bottom 20% of more than 245 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the bottom 50% of the Zacks-ranked industries leads to a negative aggregate earnings outlook for the constituent companies. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential. Since the beginning of June 2025, the industry’s consensus estimate for current financial year earnings has decreased 1.2%.

Before we present a few stocks that you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.

Industry vs. Broader Market

The Zacks Cosmetics industry has underperformed the S&P 500 composite and the broader Zacks Consumer Staples sector over the past year.

The industry has declined 13.4% over this period against the S&P 500’s growth of 20.3%. Meanwhile, the broader sector has declined 5.6%.

One-Year Price Performance

Industry's Current Valuation

Based on the forward 12-month price-to-earnings (P/E), which is commonly used to value consumer staples stocks, the industry is currently trading at 27.07X, compared with the S&P 500’s 23.35X and the sector’s 16.39X.

In the past five years, the industry has traded as high as 41.34X and as low as 20.22X, with the median being 31.73X, as the chart below shows.

Price-to-Earnings Ratio (Past Five Years)

4 Cosmetic Stocks Worth Considering

The Estee Lauder Companies: This Zacks Rank #3 (Hold) company manufactures and markets skincare, makeup, fragrance and hair care products. The Estee Lauder Companies is strategically focused on restoring profitability and driving long-term growth through its expanded Profit Recovery and Growth Plan (“PRGP”). The transformative Beauty Reimagined vision aims to position the company as a leading consumer-centric prestige beauty brand by enhancing innovation, expanding in high-growth markets and digital channels and streamlining operations for agility. With a strong online business, increased AI integration and successful brand launches, The Estee Lauder Companies is well-positioned for growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for EL’s current fiscal year EPS has moved down 0.4% in the past 30 days to $2.06. The stock has gained 66.2% in the past six months.

Price and Consensus: EL

e.l.f. Beauty: This provider of cosmetic and skincare products carries a Zacks Rank #3. e.l.f. Beauty is a leading name in accessible beauty, offering high-quality products at an exceptional value. The company continues to drive growth through innovation, digital engagement, and community-focused marketing. With its strong brand presence, expanding global footprint, and commitment to inclusivity and affordability, e.l.f. Beauty remains well-positioned to strengthen its market position in the competitive beauty industry.

The Zacks Consensus Estimate for ELF’s current fiscal year earnings per share (EPS) has increased 0.3% in the past 30 days to $3.54. e.l.f. Beauty’s stock has gained 149.8% in the past six months.

Price and Consensus: ELF

Helen of Troy: This Zacks Rank #3 company provides consumer products across Beauty, Housewares and Health & Home segments, is driving sustainable growth through a focused strategy centered on its high-performing Leadership Brands. These premium, high-margin brands are fueling market share gains through strategic investments in innovation, marketing and expanded distribution. The company’s long-term strategic plan, Elevate for Growth, enhances brand building and operational scale. Helen of Troy is also making significant progress with Project Pegasus, a global restructuring initiative aimed at improving operating margins, streamlining operations and driving reinvestment in brand growth.

The Zacks Consensus Estimate for Helen of Troy’s current fiscal year earnings per share (EPS) has remained unchanged in the past 30 days at $4.62. The stock has lost 37.4% in the past six months.

Price and Consensus: HELE

European Wax Center: The largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States, EWCZ holds a Zacks Rank #3 at present. With a highly committed network of franchise partners, the company is well-positioned for long-term expansion. European Wax Center is focused on increasing guest acquisition, boosting average ticket sales through customer retention and reactivation, and enhancing overall operational productivity. By leveraging innovative marketing strategies and advanced technology solutions, the brand aims to attract new clients while strengthening engagement with the existing ones. These efforts are strengthening customer relationships, improving brand loyalty and aiding sustainable long-term growth.

The Zacks Consensus Estimate for European Wax’s current fiscal year earnings per share (EPS) has remained unchanged in the past 30 days at 69 cents. EWCZ stock has gained 11.7% in the past six months.

Price and Consensus: EWCZ