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EL vs. ELF: Which Beauty Stock Is the Better Investment Right Now?
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Key Takeaways
EL returned to organic sales growth in Q1, with profitability rebounding under Beauty Reimagined.
ELF posted its 27th straight quarter of net sales growth on affordable, trend-driven products.
EL improved margins through efficiencies, while ELF boosted marketing and distribution spend.
The Estee Lauder Companies Inc. (EL - Free Report) and e.l.f. Beauty, Inc. (ELF - Free Report) are prominent players in the global cosmetics industry, operating at different ends of the beauty market while increasingly competing across overlapping product categories. The industry is being reshaped by digital engagement, evolving consumer preferences and a growing emphasis on value, innovation and brand differentiation.
Estee Lauder, with a market capitalization of about $41.3 billion, is a global prestige beauty leader with a diversified portfolio across skincare, makeup, fragrance and haircare. In contrast, e.l.f. Beauty, valued at roughly $5.1 billion, is a fast-growing, digitally driven company focused on affordable, trend-led products. Their face-off highlights the strategic contrast between premium brand scale and mass-market disruption in today’s competitive beauty landscape.
The Case for Estee Lauder
Estee Lauder has been benefiting from the early traction of its strategic transformation and improving conditions in the prestige beauty market. The company entered fiscal 2026 with renewed momentum, returning to organic sales growth and delivering a sharp improvement in profitability. Organic net sales increased 3% in the first quarter of fiscal 2026, while adjusted operating margin expanded 300 basis points to 7.3%, signaling meaningful progress under the Beauty Reimagined strategy.
The Profit Recovery and Growth Plan continues to generate measurable gains. Adjusted gross margin improved 60 basis points to 73.3%, supported by procurement efficiencies, reduced promotional intensity and stronger inventory discipline. These improvements more than offset inflationary pressures and foreign exchange headwinds, enabling Estee Lauder to rebuild operating leverage while sustaining targeted investments in growth and innovation.
Estee Lauder is also strengthening its position in the prestige beauty market, gaining share across key regions including Mainland China, the United States and parts of Western Europe. Robust performance from brands such as La Mer, Le Labo, TOM FORD and Estee Lauder drove category-wide growth, supported by both digital and physical retail channels, underscoring a broad-based recovery in demand.
Product innovation remains a central pillar of growth, with new launches across skincare, makeup and fragrance reinforcing brand relevance and consumer engagement. At the same time, expanded distribution through Amazon Premium Beauty, TikTok Shop and specialty retail partnerships is widening consumer access. Together, these initiatives position Estee Lauder to capitalize on evolving purchasing behaviors and sustain its recovery-driven growth trajectory.
The Case for e.l.f. Beauty
e.l.f. Beauty’s strength lies in its differentiated value-driven model, which combines affordable pricing with rapid product innovation and strong brand relevance. The company delivered its 27th consecutive quarter of net sales growth, underscoring the durability of the business model and brand momentum. In the second quarter of fiscal 2026, net sales rose 14% to $343.9 million, supported by growth across retail and e-commerce channels in both domestic and international markets.
Market share expansion remains a central pillar of e.l.f. Beauty’s growth story. In the fiscal second quarter, the company recorded 140 basis points of market share gains for the core brand, reinforcing its leadership in the mass beauty segment. This performance reflects the brand’s ability to capture value-conscious consumers while competing effectively with both mass and prestige players. The successful launch of rhode in Sephora North America further illustrates e.l.f. Beauty’s growing influence across multiple price tiers and retail formats.
Strategically, e.l.f. Beauty has built a differentiated portfolio anchored in affordability, inclusivity and digital-first engagement. Its brand ecosystem, spanning e.l.f. Cosmetics, e.l.f. SKIN, Naturium, rhode and others, targets Gen Z and millennial consumers with rapid innovation cycles and culturally relevant marketing. The company’s increased investment in marketing, merchandising and distribution reflects a strategic focus on supporting brand growth, expanding retail presence and strengthening consumer engagement, even as these initiatives weigh on margins in the near term.
Looking ahead, e.l.f. Beauty’s growth trajectory remains structurally supported by expanding distribution and category penetration. Management expects fiscal 2026 net sales to increase 18-20%, highlighting confidence in continued market share gains and long-term whitespace opportunities. With a digitally native operating model and strong alignment with evolving consumer preferences, e.l.f. is positioned as a disruptive force reshaping the competitive dynamics of the cosmetics industry.
How Does the Zacks Consensus Estimate Compare for EL & ELF?
The Zacks Consensus Estimate for Estee Lauder’s current fiscal-year sales and EPS implies year-over-year growth of 4.6% and 43.7%, respectively. The consensus estimate for EPS for the current fiscal year has increased from $2.16 to $2.17 over the past seven days. The same for the next fiscal-year sales and EPS implies a year-over-year jump of 3.6% and 36.3%, respectively. The consensus mark for the next fiscal-year EPS has risen a penny to $2.96 over the past seven days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales implies a year-over-year increase of 19.3%, while the same for earnings indicates a decrease of 15.3%. The consensus estimate for EPS for the current-fiscal year has increased from $2.85 to $2.87 over the past seven days. The same for the next fiscal-year sales and EPS implies year-over-year growth of 17.9% and 23.9%, respectively. The consensus mark for the next fiscal-year EPS has risen from $3.53 to $3.55 over the past seven days.
Image Source: Zacks Investment Research
EL & ELF: A Look at Past-Year Stock Performance
Over the past year, shares of Estee Lauder have rallied 39.3%, whereas e.l.f. Beauty has tumbled 19.8%. EL outperformed the industry’s growth of 13.2%, while ELF lagged.
Image Source: Zacks Investment Research
EL vs. ELF: A Peek Into Stock Valuation
Estee Lauder is trading at a forward 12-month price-to-earnings (P/E) ratio of 43.8, above its one-year median of 38.88. Meanwhile, e.l.f. Beauty’s forward P/E ratio stands at 24.71, below its median of 35.97.
Image Source: Zacks Investment Research
EL vs. ELF: Which Stock Looks More Promising Now?
Both Estee Lauder and e.l.f. Beauty offer distinct growth stories, but the former currently presents a more compelling risk-reward profile. Its ongoing operational turnaround, margin recovery and strong earnings growth outlook signal improving fundamentals backed by global scale and premium brand strength. While e.l.f. Beauty continues to outperform on revenue growth, but rising margin pressure and sustainability concerns temper its upside. At this stage of the beauty cycle, Estee Lauder appears better positioned for investors.
Image: Bigstock
EL vs. ELF: Which Beauty Stock Is the Better Investment Right Now?
Key Takeaways
The Estee Lauder Companies Inc. (EL - Free Report) and e.l.f. Beauty, Inc. (ELF - Free Report) are prominent players in the global cosmetics industry, operating at different ends of the beauty market while increasingly competing across overlapping product categories. The industry is being reshaped by digital engagement, evolving consumer preferences and a growing emphasis on value, innovation and brand differentiation.
Estee Lauder, with a market capitalization of about $41.3 billion, is a global prestige beauty leader with a diversified portfolio across skincare, makeup, fragrance and haircare. In contrast, e.l.f. Beauty, valued at roughly $5.1 billion, is a fast-growing, digitally driven company focused on affordable, trend-led products. Their face-off highlights the strategic contrast between premium brand scale and mass-market disruption in today’s competitive beauty landscape.
The Case for Estee Lauder
Estee Lauder has been benefiting from the early traction of its strategic transformation and improving conditions in the prestige beauty market. The company entered fiscal 2026 with renewed momentum, returning to organic sales growth and delivering a sharp improvement in profitability. Organic net sales increased 3% in the first quarter of fiscal 2026, while adjusted operating margin expanded 300 basis points to 7.3%, signaling meaningful progress under the Beauty Reimagined strategy.
The Profit Recovery and Growth Plan continues to generate measurable gains. Adjusted gross margin improved 60 basis points to 73.3%, supported by procurement efficiencies, reduced promotional intensity and stronger inventory discipline. These improvements more than offset inflationary pressures and foreign exchange headwinds, enabling Estee Lauder to rebuild operating leverage while sustaining targeted investments in growth and innovation.
Estee Lauder is also strengthening its position in the prestige beauty market, gaining share across key regions including Mainland China, the United States and parts of Western Europe. Robust performance from brands such as La Mer, Le Labo, TOM FORD and Estee Lauder drove category-wide growth, supported by both digital and physical retail channels, underscoring a broad-based recovery in demand.
Product innovation remains a central pillar of growth, with new launches across skincare, makeup and fragrance reinforcing brand relevance and consumer engagement. At the same time, expanded distribution through Amazon Premium Beauty, TikTok Shop and specialty retail partnerships is widening consumer access. Together, these initiatives position Estee Lauder to capitalize on evolving purchasing behaviors and sustain its recovery-driven growth trajectory.
The Case for e.l.f. Beauty
e.l.f. Beauty’s strength lies in its differentiated value-driven model, which combines affordable pricing with rapid product innovation and strong brand relevance. The company delivered its 27th consecutive quarter of net sales growth, underscoring the durability of the business model and brand momentum. In the second quarter of fiscal 2026, net sales rose 14% to $343.9 million, supported by growth across retail and e-commerce channels in both domestic and international markets.
Market share expansion remains a central pillar of e.l.f. Beauty’s growth story. In the fiscal second quarter, the company recorded 140 basis points of market share gains for the core brand, reinforcing its leadership in the mass beauty segment. This performance reflects the brand’s ability to capture value-conscious consumers while competing effectively with both mass and prestige players. The successful launch of rhode in Sephora North America further illustrates e.l.f. Beauty’s growing influence across multiple price tiers and retail formats.
Strategically, e.l.f. Beauty has built a differentiated portfolio anchored in affordability, inclusivity and digital-first engagement. Its brand ecosystem, spanning e.l.f. Cosmetics, e.l.f. SKIN, Naturium, rhode and others, targets Gen Z and millennial consumers with rapid innovation cycles and culturally relevant marketing. The company’s increased investment in marketing, merchandising and distribution reflects a strategic focus on supporting brand growth, expanding retail presence and strengthening consumer engagement, even as these initiatives weigh on margins in the near term.
Looking ahead, e.l.f. Beauty’s growth trajectory remains structurally supported by expanding distribution and category penetration. Management expects fiscal 2026 net sales to increase 18-20%, highlighting confidence in continued market share gains and long-term whitespace opportunities. With a digitally native operating model and strong alignment with evolving consumer preferences, e.l.f. is positioned as a disruptive force reshaping the competitive dynamics of the cosmetics industry.
How Does the Zacks Consensus Estimate Compare for EL & ELF?
The Zacks Consensus Estimate for Estee Lauder’s current fiscal-year sales and EPS implies year-over-year growth of 4.6% and 43.7%, respectively. The consensus estimate for EPS for the current fiscal year has increased from $2.16 to $2.17 over the past seven days. The same for the next fiscal-year sales and EPS implies a year-over-year jump of 3.6% and 36.3%, respectively. The consensus mark for the next fiscal-year EPS has risen a penny to $2.96 over the past seven days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales implies a year-over-year increase of 19.3%, while the same for earnings indicates a decrease of 15.3%. The consensus estimate for EPS for the current-fiscal year has increased from $2.85 to $2.87 over the past seven days. The same for the next fiscal-year sales and EPS implies year-over-year growth of 17.9% and 23.9%, respectively. The consensus mark for the next fiscal-year EPS has risen from $3.53 to $3.55 over the past seven days.
Image Source: Zacks Investment Research
EL & ELF: A Look at Past-Year Stock Performance
Over the past year, shares of Estee Lauder have rallied 39.3%, whereas e.l.f. Beauty has tumbled 19.8%. EL outperformed the industry’s growth of 13.2%, while ELF lagged.
Image Source: Zacks Investment Research
EL vs. ELF: A Peek Into Stock Valuation
Estee Lauder is trading at a forward 12-month price-to-earnings (P/E) ratio of 43.8, above its one-year median of 38.88. Meanwhile, e.l.f. Beauty’s forward P/E ratio stands at 24.71, below its median of 35.97.
Image Source: Zacks Investment Research
EL vs. ELF: Which Stock Looks More Promising Now?
Both Estee Lauder and e.l.f. Beauty offer distinct growth stories, but the former currently presents a more compelling risk-reward profile. Its ongoing operational turnaround, margin recovery and strong earnings growth outlook signal improving fundamentals backed by global scale and premium brand strength. While e.l.f. Beauty continues to outperform on revenue growth, but rising margin pressure and sustainability concerns temper its upside. At this stage of the beauty cycle, Estee Lauder appears better positioned for investors.
EL has a Zacks Rank #2 (Buy), while ELF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.