Companies within the Zacks Cosmetics industry are facing a challenging macroeconomic backdrop, marked by softer consumer spending, uneven retail restocking and rising input costs. Higher expenses for packaging, ingredients and logistics are weighing on margins, while trade tensions, currency volatility and supply-chain risks continue to create uncertainty and intensify competition.

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) 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 navigating mounting challenges amid an increasingly uncertain economic environment. Ongoing trade tensions, softer consumer spending and uneven retail restocking cycles are reshaping the beauty market. As living costs rise and household savings come under pressure, consumers are prioritizing essential purchases and scaling back discretionary spending, including cosmetics. This shift in behavior is weighing on demand across many beauty brands. At the same time, operational costs are rising due to higher prices for packaging materials, ingredients, logistics and promotional activities. These cost pressures are squeezing profit margins and intensifying competition within the industry. Moreover, potential changes in trade policies or global supply-chain disruptions could further elevate costs and influence product pricing, adding strain for companies operating in a volatile and competitive landscape.

International Risk Factors: Cosmetic companies with global operations face a range of international risks, including unfavorable foreign currency movements that can impact revenues and profitability. Geopolitical tensions and political instability may disrupt market access, reduce supply-chain efficiency and affect operational continuity. In addition, trade conflicts, tariffs, sanctions and other regulatory restrictions could weigh on overall industry performance.

Innovation and Digitalization Driving Growth: Innovation and digitalization remain key growth drivers in the beauty and skincare market. Consumers are increasingly seeking differentiated products that combine advanced technology with science-backed formulations, prompting companies to continuously innovate and expand their offerings. Growing demand for organic and clean beauty products is further supporting market growth. Enhancing e-commerce capabilities remains a major focus, with tools such as virtual try-ons, seamless digital payments and data-driven online marketing gaining traction. In addition, many beauty brands are pursuing strategic acquisitions and partnerships to broaden product portfolios and remain competitive in this evolving landscape.

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 #225, which places it in the bottom 8% of more than 244 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 December 2025, the industry’s consensus estimate for current financial-year earnings has decreased 9.7%.

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 but outperformed the broader Zacks Consumer Staples sector over the past year.

The industry has gained 7.7% over this period, underperforming the S&P 500’s growth of 15.8%. Meanwhile, the broader sector has declined 3.5%.

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 23.75X compared with the S&P 500’s 20.83X and the sector’s 16.42X.

In the past five years, the industry has traded as high as 41.34X and as low as 20.22X, with the median being 29.57X, as the chart below shows.

Price-to-Earnings Ratio (Past Five Years)

3 Cosmetic Stocks Worth Considering

The Estee Lauder Companies: This Zacks Rank #3 (Hold) company manufactures and markets skincare, makeup, fragrance and hair care products across a portfolio of premium brands. The company is focused on restoring profitability and driving long-term growth through its ongoing Profit Recovery and Growth Plan. Its “Beauty Reimagined” strategy aims to position The Estee Lauder Companies as a leading consumer-centric prestige beauty player by strengthening innovation, expanding in high-growth markets and digital channels, and streamlining operations for greater agility. With a strong online presence, continued product innovation and increasing investments in technology and data capabilities, the company remains focused on improving efficiency and supporting sustainable long-term 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 earnings per share (EPS) has remained unchanged in the past 30 days at $2.23. The stock has gained 27.4% in the past year.

Price and Consensus: EL

e.l.f. Beauty: This Zacks Rank #3 company offers cosmetic and skincare products with a strong focus on accessible, high-quality beauty at compelling price points. The company has built a differentiated position through its value-driven proposition, combining affordability with premium-quality offerings. The company continues to drive growth through innovation, strong digital engagement and a community-led, disruptive marketing approach. e.l.f. Beauty continues to build out its international footprint, growing brand portfolio, expanding distribution and focus on inclusivity. This positions e.l.f. Beauty well to further strengthen its standing in the competitive beauty industry.

The Zacks Consensus Estimate for ELF’s current fiscal-year EPS has remained unchanged in the past 30 days at $3.11. e.l.f. Beauty’s stock has gained 11.8% in the past year.

Price and Consensus: ELF

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

The Zacks Consensus Estimate for European Wax Center’s current fiscal-year EPS has moved down 1.5% in the past 30 days to 65 cents. EWCZ stock has plunged 35.5% in the past year.

Price and Consensus: EWCZ