Research from Water Tower Research, Water Tower Research

Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

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Equity Bottom-Up

<div><ul><li>Strong 1QFY27 results, even excluding tariff refund. On August 5, ELF reported sales, EBITDA, and EPS that exceeded consensus, even excluding a tariff refund that boosted EBITDA by $50 million and EPS by $0.68.</li><li>The beat was due mostly to Rhode’s outperformance and some shift in marketing spending to later in the year. </li><li>ELF plans to reinvest all of the refund, so the increase in FY27 guidance was all due to strength in the underlying business.</li></ul></div>

Strong 1QFY27 results, even excluding tariff refund. On August 5, ELF reported sales, EBITDA, and EPS that exceeded consensus, even excluding a tariff refund that boosted EBITDA by $50 million and EPS by $0.68.The beat was due mostly to Rhode’s outperformance and some shift in marketing spending to later in the year. ELF plans to reinvest all of the refund, so the increase in FY27 guidance was all due to strength in the underlying business.

elf Beauty Inc

ELF: Rhode Is Paving the Road to Growth