$ELF · Financial Education · 2026-11-04

Next topic, let's talk about 'Elf on the Shelf'. Next, we will discuss the three best small-cap stocks I have ever bought.

How will the results of this election affect AMD, Kake, ELF, and Celsius, right?

Let's start the discussion with ELF on a Shelf. Listen. ELF on a Shelf. A plus, baby. Look at this. Net sales growth 51%. Selling expenses increased by only 43%. Annual gross profit growth is 55%.

We will accept it if SGNA increases by 30%, gross profit by 55%, and revenue by 51%. Right now, they have a change or loss of about $18 million less in the fair value of the contingent consideration.

This is a category that usually happens once, so keep that in mind, okay? But this is a loss. Operating income increased 579% year-over-year from $7.7 million to $52 million. Other income was quite positive.

This was a profit of $563,000, compared to a loss of $1.9 million in the same quarter last year. Interest expenses for the company increased by 9% year-on-year. So, keep that in mind.

Right. Net income increased by 92% year-on-year. EPS has increased by 900% year-over-year. I mean, this is really awesome.

You might be wondering, why didn't I give them an A++ grade? I didn't give them an A++ grade because there are a few things involved, right? Interest costs have increased slightly, but that's not a big concern for me.

The main thing is, I gave them an A+ grade, not an A++, because their net income margin is still quite bad. Net income of only $30 million against revenue of $520 million. This is a really bad net income margin.

The good news is that it is on the right track and they will be able to grow it rapidly in the next two to three years, but the reality is that the net income margin here is still quite weak.

Now, let me show you this. This is the balance sheet of Elf. Cash and cash equivalents increased from $194 million to $350 million. Accounts receivable were $246 million compared to $154 million in the same period last year.

And they also increased inventory slightly, bringing it to $260 million from $247 million in the same quarter last year. Long-term debt has been reduced from $831 million to $794 million.

But keep in mind that there is a new category here that wasn't there last year. Long-term contingent consideration, which is $68 million. So keep that in mind. But overall the balance sheet is outstanding and it is much stronger than this time last year. Right? So I liked it.

Now look at the guidance. Wow! The company has now updated its outlook for 2027, with revenue expected to exceed $2 billion. Listen, I've already made everything clear. I told you the whole game plan for Elf, right?

You could have bought this stock during the summer, in June, for $49, right? And tomorrow people might buy it for $120 or some other price, right? 125, 130, whatever, right? I have already said everything.

I told you before that they always give very low guidance in the spring and exceed that target throughout the year, so everyone starts liking ELF stock at the end of the year, right?

It's the same game. I see them do this almost every year, and people get into trouble by selling the stock in the spring, then watch it go up in the summer and the rest of the year and think, "Oh, what did I do !" Right.

Adjusted EBITDA. Now they expect an EBITDA of $421 million to $427 million. We can put it somewhere between 424 million. Anyway, maybe I'll bring it up. The median is 424 million versus the expected 404 million.

Net income is now likely to be 232 million, whereas before it was closer to 213.5 million, right? Adjusted diluted EPS 3.82. So we can call it 3.84, right? Compared to the previous 3.52-3.53. That's awesome, friend.

Everything...so is ELF still worth buying? The thing is. And here is my target price for ELF. Listen, I told you that I think this stock will be in the $120 to $140 range by the end of the year, right?

I still believe that. In my opinion, in the worst case scenario, it will end up at $120. And in the best case scenario, maybe around $140, right? In my opinion, this is a $300 to $500 stock in the long term.

So, it's still worth buying. It's still worth buying. But is it as good a buy now as it was when it was $49 at the beginning of the year? No. But the train is leaving without you.

So, you may or may not get on the train. It's your business, right? It's a way to make money. It's a money-making machine. But the stock is very strange, friend. People panic and sell it, and when they sell, they do it completely, and then it has a rally that is unbelievable.

I mean, just imagine how much of a rally it created. In June it was $49. Now it is $118. As I said, I wouldn't be surprised if the stock price reaches $130 by the end of the year, from $49 to $130.