Why e.l.f. Beauty Inc. Stock Dove 18 % in August

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What happened

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Shares of e.l.f Beauty (NYSE: ELF) lost 18% last month, according to data provided by S&P Global Market Intelligence.

The decline sent the stock to a new low, down 24% since shares began trading in late 2016.

So what

The cosmetics specialist's fiscal second-quarter results, released early in the month, left many investors wanting more. In that announcement, the company showed strong sales growth and a healthy expansion in profitability. Revenue gains sped up to a 27% pace from 15%, and gross profit margin jumped to 64% of sales from 57% a year ago. Highlighting those top- and bottom-line improvements, CEO Tarang Amin said the executive team was "pleased with our strong progress."

Detracting from that good news was the fact that expenses ate up a bigger proportion of earnings as the retailer continues to adjust to life as a public company.

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Now what

Amin and his executive team still see revenue growing by between 24% and 28% this year to as much as $295 million. Continued investments into building out the brand and the improving the selling infrastructure will keep a lid on earnings growth, though, and so net income should only expand slightly from last year's $18 million.

That profit speed bump shouldn't threaten e.l.f.'s positive long-term trajectory, which today is being characterized by market share gains and healthy pricing in an altogether weak industry.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends e.l.f. Beauty, Inc. The Motley Fool has a disclosure policy.