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Ulta Beauty Inc ULTA

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Stock XNAS Rating as of
$395.09 +9.51 (2.47%)
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Company Report

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Ulta Beauty Earnings: Guidance Lowered, but Impact Not Too Severe; Shares Fairly Valued

David Swartz

Narrow-moat Ulta Beauty opened 2024 with a blemish as a loss of market share in prestige beauty resulted in lowered guidance for the year. We think the firm is feeling the impact of the addition of Sephora shops in hundreds of no-moat Kohl’s stores as well as the willingness of more luxury beauty brands to sell through wide-moat Amazon. Despite these pressures, we think Ulta’s competitive advantages, such as its large selection of merchandise and more than 43 million loyalty members, will allow for mid-single-digit percentage sales growth and 14% operating margins in the long run.

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Price vs Fair Value

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ULTA is trading at a 274% premium.
Price
$395.09
Fair Value
$217.00
Uncertainty
Medium
1-Star Price
$153.80
5-Star Price
$196.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

As the largest specialty beauty retailer in the US, Ulta has access to leading brands and exclusive products. Its merchandising encourages frequent store visitation and draws shoppers from department stores.

Bears

Beauty products are available through many retail channels, putting Ulta in competition with the largest retailers in the US. Attracted by the favorable margins, some of them are expanding their beauty offerings.

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Trading Information

Previous Close Price
$385.58
Day Range
$382.12–421.21
52-Week Range
$368.02–574.76
Bid/Ask
$395.05 / $395.56
Market Cap
$18.85 Bil
Volume/Avg
3.4 Mil / 956,814

Key Statistics

Price/Earnings (Normalized)
14.99
Price/Sales
1.67
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
5.58%

Company Profile

With 1,385 stores at the end of fiscal 2023 and a partnership with Target, Ulta Beauty is the largest specialized beauty retailer in the U.S. The firm offers makeup (41% of 2023 sales), fragrances, skin care (19% of sales), and hair care products (19% of sales), and bath and body items. Ulta offers private-label products and merchandise from more than 500 vendors. It also offers salon services, including hair, makeup, skin, and brow services, in all stores. Most Ulta stores are approximately 10,000 square feet and are in suburban strip centers. Ulta was founded in 1990 and is based in Bolingbrook, Illinois.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Mid Core
Total Number of Employees
56,000
Website
https://www.ulta.com

Competitors

Valuation

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Metric
ULTA
TGT
M
Price/Earnings (Normalized)
 14.9917.536.14
Price/Book Value
 8.035.221.28
Price/Sales
 1.670.680.23
Price/Cash Flow
 9.779.512.90
Price/Earnings
ULTA
TGT
M

Financial Strength

Metric
ULTA
TGT
M
Quick Ratio
 0.460.270.25
Current Ratio
 1.760.911.38
Interest Coverage
 —11.551.06
Quick Ratio
ULTA
TGT
M

Profitability

Metric
ULTA
TGT
M
Return on Assets (Normalized)
 23.80%7.99%5.76%
Return on Equity (Normalized)
 61.43%34.30%23.45%
Return on Invested Capital (Normalized)
 31.90%14.78%11.22%
Return on Assets
ULTA
TGT
M
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