Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
e.l.f. Beauty, Inc., profitability ratios
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
The company's profitability profile exhibits a significant recovery and expansion phase following a sharp contraction in 2021. Across all key metrics, there is a consistent upward trajectory from 2022 through 2024, with most ratios ending the period substantially higher than their 2020 levels.
- Gross Profit Margin
- A steady increase in gross profitability is observed, rising from 64.03% in 2020 to 70.72% in 2024. This growth indicates an improvement in production efficiency or an increase in pricing power, as the margin expanded by more than 600 basis points over the five-year period.
- Operating and Net Profit Margins
- Both margins experienced a severe dip in 2021, with the operating margin falling to 2.95% and the net profit margin to 1.96%. However, a strong recovery followed, with the operating margin reaching 14.62% and the net profit margin reaching 12.47% by 2024. The convergence of these two figures suggests a disciplined management of non-operating expenses during the growth phase.
- Return on Equity (ROE) and Return on Assets (ROA)
- Efficiency in utilizing capital and assets improved dramatically after 2021. ROE surged from a low of 2.31% in 2021 to 19.87% in 2024, while ROA grew from 1.28% to 11.31% over the same period. The acceleration in ROE relative to ROA indicates an effective use of financial leverage to amplify returns for shareholders.
Overall, the financial data reveals a transition from a period of compressed margins and low returns to a state of high operational efficiency and strengthened profitability.
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Return on Sales
Return on Investment
Gross Profit Margin
e.l.f. Beauty, Inc., gross profit margin calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross profit | 724,096) | 390,396) | 251,732) | 206,198) | 181,123) | |
| Net sales | 1,023,932) | 578,844) | 392,155) | 318,110) | 282,851) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 70.72% | 67.44% | 64.19% | 64.82% | 64.03% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 51.39% | 47.86% | 47.43% | 51.25% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 724,096 ÷ 1,023,932 = 70.72%
2 Click competitor name to see calculations.
The financial performance between the fiscal years ending March 31, 2020, and March 31, 2024, is characterized by aggressive top-line growth and a simultaneous expansion of core profitability margins. Net sales and gross profit exhibit a consistent upward trajectory, with the rate of growth accelerating significantly in the final two years of the analyzed period.
- Revenue and Profit Expansion
- Net sales grew from 282,851 thousand US$ in 2020 to 1,023,932 thousand US$ in 2024, representing a substantial increase in market scale. Parallel to this, gross profit rose from 181,123 thousand US$ to 724,096 thousand US$. The most significant surge occurred between 2023 and 2024, where gross profit nearly doubled, indicating strong demand and effective scaling of operations.
- Gross Profit Margin Trends
- The gross profit margin remained relatively stagnant for the first three years, fluctuating narrowly between 64.03% and 64.82% from 2020 to 2022. A distinct upward trend emerged starting in 2023, with the margin climbing to 67.44%, and reaching a peak of 70.72% by March 31, 2024. This indicates that the company has successfully increased its profitability per dollar of sales.
- Analysis of Margin Improvement
- The expansion of the gross profit margin by approximately 653 basis points between 2022 and 2024 suggests a significant improvement in operational efficiency. This trend indicates that revenue growth is outstripping the growth of the cost of goods sold, likely driven by economies of scale, optimized supply chain management, or a favorable shift in the product mix toward higher-margin offerings.
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Operating Profit Margin
e.l.f. Beauty, Inc., operating profit margin calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Operating income | 149,678) | 68,143) | 29,770) | 9,400) | 29,950) | |
| Net sales | 1,023,932) | 578,844) | 392,155) | 318,110) | 282,851) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 14.62% | 11.77% | 7.59% | 2.95% | 10.59% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 22.07% | 22.11% | 22.21% | 23.63% | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Staples | 7.96% | 7.31% | 8.44% | 8.48% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 149,678 ÷ 1,023,932 = 14.62%
2 Click competitor name to see calculations.
An analysis of the five-year period ending March 31, 2024, reveals a trajectory of significant revenue growth coupled with a recovery and subsequent expansion of operational efficiency. Net sales grew consistently each year, increasing from 282.85 million US dollars in 2020 to 1.02 billion US dollars in 2024.
- Operating Profit Margin Volatility
- A substantial contraction in the operating profit margin was observed between 2020 and 2021, where the ratio fell from 10.59% to 2.95%. This decline occurred despite an increase in net sales, indicating that operating expenses grew at a rate significantly higher than revenue during that period.
- Recovery and Sustained Margin Growth
- Following the 2021 trough, the operating profit margin demonstrated a consistent upward trend. The margin improved to 7.59% in 2022, reached 11.77% in 2023, and concluded the period at 14.62% in 2024. This progression indicates a successful realignment of cost structures and improved operational efficiency.
- Analysis of Operational Leverage
- The relationship between net sales and operating income suggests strong operational leverage in the latter half of the period. Between 2023 and 2024, operating income increased by approximately 120%, rising from 68.14 million US dollars to 149.68 million US dollars, while net sales increased by approximately 76%. This disproportionate growth in income relative to sales confirms that the company is scaling its operations efficiently.
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Net Profit Margin
e.l.f. Beauty, Inc., net profit margin calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 127,663) | 61,530) | 21,770) | 6,232) | 17,884) | |
| Net sales | 1,023,932) | 578,844) | 392,155) | 318,110) | 282,851) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 12.47% | 10.63% | 5.55% | 1.96% | 6.32% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Procter & Gamble Co. | 17.70% | 17.87% | 18.38% | 18.79% | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Staples | 5.69% | 5.47% | 6.11% | 6.21% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Net sales
= 100 × 127,663 ÷ 1,023,932 = 12.47%
2 Click competitor name to see calculations.
The financial trajectory from March 31, 2020, to March 31, 2024, is characterized by aggressive top-line growth and a significant recovery and expansion of profitability margins. While the period began with a contraction in profit efficiency, the subsequent years demonstrate strong operating leverage, where net income growth has substantially outpaced revenue growth.
- Net Sales Trend
- A consistent and accelerating upward trend in net sales is observed, growing from 282,851 thousand US$ in 2020 to 1,023,932 thousand US$ in 2024. The most significant acceleration occurred between 2023 and 2024, where sales increased by approximately 76% in a single fiscal year, crossing the one-billion-dollar threshold.
- Net Income Performance
- Net income exhibited initial volatility, dropping from 17,884 thousand US$ in 2020 to 6,232 thousand US$ in 2021. Following this decline, a period of rapid growth ensued, with income rising to 21,770 thousand US$ in 2022, 61,530 thousand US$ in 2023, and peaking at 127,663 thousand US$ in 2024. This represents a total increase of approximately 613% from the 2020 baseline.
- Net Profit Margin Analysis
- The net profit margin experienced a sharp decline to 1.96% in 2021, down from 6.32% in 2020. However, a sustained recovery trend followed, with margins expanding to 5.55% in 2022, nearly doubling to 10.63% in 2023, and reaching 12.47% by 2024. The expansion of the margin during a period of massive sales growth suggests improved cost management and increased efficiency in converting revenue into actual profit.
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Return on Equity (ROE)
e.l.f. Beauty, Inc., ROE calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 127,663) | 61,530) | 21,770) | 6,232) | 17,884) | |
| Stockholders’ equity | 642,572) | 411,017) | 312,429) | 269,646) | 242,171) | |
| Profitability Ratio | ||||||
| ROE1 | 19.87% | 14.97% | 6.97% | 2.31% | 7.38% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Procter & Gamble Co. | 29.59% | 31.33% | 31.64% | 30.85% | — | |
| ROE, Industry | ||||||
| Consumer Staples | 32.18% | 30.71% | 32.10% | 31.40% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 127,663 ÷ 642,572 = 19.87%
2 Click competitor name to see calculations.
The analysis of profitability ratios from fiscal year 2020 to 2024 reveals a period of volatility followed by a strong acceleration in capital efficiency. After a significant contraction in 2021, the company entered a phase of rapid expansion, characterized by exponential growth in net earnings that substantially outpaced the growth of the equity base.
- Net Income Trends
- Net income experienced a sharp decline in 2021, falling to 6,232 thousand dollars from 17,884 thousand dollars in 2020. This was followed by a consistent and accelerating recovery, with earnings rising to 21,770 thousand dollars in 2022, 61,530 thousand dollars in 2023, and peaking at 127,663 thousand dollars in 2024. The growth between 2021 and 2024 represents a significant increase in overall profitability.
- Stockholders' Equity Growth
- Stockholders' equity has demonstrated steady growth throughout the analyzed period, increasing from 242,171 thousand dollars in 2020 to 642,572 thousand dollars in 2024. The most substantial increase occurred between 2023 and 2024, where equity grew by approximately 231,555 thousand dollars, suggesting a strong accumulation of retained earnings or additional capital contributions.
- Return on Equity (ROE) Analysis
- The ROE fluctuated in alignment with net income, dropping to a period low of 2.31% in 2021. A recovery to 6.97% was observed in 2022, followed by a sharp increase to 14.97% in 2023 and 19.87% in 2024. The upward trajectory of the ROE indicates a substantial improvement in the company's ability to generate profit from its shareholders' investments, driven primarily by the aggressive growth in net income relative to the expansion of the equity base.
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Return on Assets (ROA)
e.l.f. Beauty, Inc., ROA calculation, comparison to benchmarks
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 127,663) | 61,530) | 21,770) | 6,232) | 17,884) | |
| Total assets | 1,129,247) | 595,601) | 494,632) | 487,393) | 453,104) | |
| Profitability Ratio | ||||||
| ROA1 | 11.31% | 10.33% | 4.40% | 1.28% | 3.95% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Procter & Gamble Co. | 12.16% | 12.13% | 12.58% | 11.99% | — | |
| ROA, Industry | ||||||
| Consumer Staples | 8.89% | 8.28% | 8.95% | 8.75% | — | |
Based on: 10-K (reporting date: 2024-03-31), 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 127,663 ÷ 1,129,247 = 11.31%
2 Click competitor name to see calculations.
The financial trajectory from fiscal year 2020 to 2024 demonstrates a significant acceleration in profitability and asset utilization efficiency. While a period of volatility occurred early in the timeframe, the subsequent years show exponential growth in net earnings that outpaced the expansion of the asset base.
- Net Income Trends
- Earnings experienced a sharp decline in 2021, falling to 6,232 thousand US dollars from 17,884 thousand US dollars in the previous year. However, a strong recovery followed, with net income increasing sequentially each year. The most substantial growth occurred between 2022 and 2024, where earnings rose from 21,770 thousand US dollars to 127,663 thousand US dollars, representing a nearly six-fold increase over a two-year period.
- Asset Base Expansion
- Total assets remained relatively stable between 2020 and 2022, fluctuating slightly between 453,104 thousand and 494,632 thousand US dollars. A more aggressive expansion phase began in 2023, culminating in a significant increase in 2024, where total assets reached 1,129,247 thousand US dollars. This suggests a substantial investment in the company's infrastructure or resource acquisition to support scaling operations.
- Return on Assets (ROA) Performance
- The ROA mirrored the volatility of net income, dropping to a low of 1.28% in 2021. From 2022 onward, a consistent upward trend is observed, with the ratio climbing to 4.40% in 2022, 10.33% in 2023, and peaking at 11.31% in 2024. This progression indicates a marked improvement in management's ability to convert invested capital into profit, as the rate of income growth significantly exceeded the rate of asset accumulation.
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