ELF Beauty stock rallied on Thursday after a late dive Wednesday, rising on news that international trade court judges had limited President Donald Trump's authority to impose tariffs. An Appellate court struck down that ruling on Thurday. In addition, the cosmetic company cleared Q4 estimates and announced a deal to acquire Hailey Bieber's skincare and makeup brand, Rhode, for $1 billion.
ELF Beauty late Wednesday announced a 47% increase in earnings to 78 cents per share adjusted on 4% revenue growth to $332.65 million.
FactSet analysts expected earnings of 72 cents per share on $326.7 million in sales.
ELF's gross margin increased about 50 basis points to 71% for the period.
The company noted that Q4 marked its 25th consecutive quarter of net sales growth and market share gains. CFO Tarang Amin in the release added that ELF Beauty gained 190 basis points of market share in the U.S. during the year.
ELF did not provide a 2026 outlook due to the "wide range of potential outcomes related to tariffs."
Rhode Acquisition Adds Star Power
ELF Beauty also announced a $1 billion deal to acquire Rhode, a lifestyle and beauty brand launched by Hailey Bieber in 2022. Bieber is a model and influencer. She is married to pop star Justin Bieber.
Rhode has quickly exploded as a popular brand. The company doubled its customer base over the past year and generated $212 million in net sales for the 12 months ending on March 31, according to the release. Rhode is currently a direct-to-consumer online business, but plans to launch its first in-store partnership with Sephora for North America and U.K. locations before the end of the year.
Per the deal, ELF Beauty will acquire Rhode for $800 million at closing, comprised of $600 million in cash and $200 million in newly-issued shares of ELF stock to existing equity holders of Rhode. The transaction also includes a potential $200 million earnout consideration based on future brand growth over a three-year period after closing.
The company expects the deal to close in Q2 2026, subject to regulatory approvals and customary closing conditions.
ELF Beauty Stock Performance
Shares rallied almost 24% Thursday. The stock had slumped late Wednesday, after the company opted not to provide 2026 guidance. Share rebounded after the U.S. Court of International Trade ruling late Wednesday. However, that was struck down by an Appellate court on Thursday.
ELF Beauty stock turned higher in May after a five-month dive. The stock is up 126% from a mid-April low, but still almost 49% below a July 2024 high.
Court Slashes Trump Tariffs On China, Apple And The World
Rival Ulta Beauty climbed 1.2% Thursday. ULTA stock is trading near the top of a buy zone, above a 401.72 cup-with-handle entry.
Elf has a 21-day average true range of 5.2%. Ulta's ATR is 2.5%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
