Stock (Symbol) |
Ulta Salon (ULTA) |
Stock Price |
$205 |
Sector |
| Retail & Travel |
Data is as of |
| October 22, 2017 |
Expected to Report |
| Nov 30 |
Company Description |
 Ulta Beauty is a beauty retailer that offers cosmetics, fragrance, skin, hair care products and salon services. The Company offers approximately 20,000 products from over 500 beauty brands across all categories, including the Company’s own private label. The Company also offers a full-service salon in every store featuring hair, skin and brow services. The Company operates approximately 970 retail stores across over 48 states and the District of Columbia and also distributes its products through its website. Source: Thomson Financial |
Sharek’s Take |
 Ulta Salon (ULTA) has fallen from $300 to $200 since June. Along the way the number have continued to look good. Profits were up 32% and 28% the last two qtrs, yet each time the company reported the stock has fallen on high volume. Here’s a few bulletpoints from last qtr:
Ulta has been delivering profit growth of around 25% to 35% for pretty much a decade now. And it continuously upped and beat estimates — as its doing now. Management expects at least 20% profit growth to continue through 2017, 2018 and 2019. Still, analysts have soured on the stock, thinking margins will erode with online competition from Amazon. On last qtr’s conference call management actually said profit margins will rise next year, and people didn’t believe him. But qtrly estimates call for profits to rise an average of 22% the next 4 qtrs, and with ULTA’s history of upping and beating that could mean 25% to 30% growth. With the stock’s rapid decline, the P/E’s come down from the mid-30s to the mid-20s. I personally think the selloff has been too far and everything is fine here. But I bought in around $260 so who am I to know? What’s clear is the selloff has been on high volume, which could be a sign of future declines, thus we should lower our position in the stock. |
One Year Chart |
 The P/E just came down from 35 2QtrsAgo to 31 LastQtr and 24 this qtr. Meanwhile everything looks fine here. Numbers wise (outside of the stock price that is). What’s not shown here is these two recent drops have come on extremely high volume. Looking back at ULTA’s history it usually jumps higher on high-volume days but that’s not always the case. Qtrly profit Estimates call for 19%, 27%, 22% and 21% profit growth the next 4 qtrs. These are solid numbers. But the Est. LTG did decline from 20% to 18% since last qtr. |
Fair Value |
 My Fair Value on this stock is a P/E of 27, which means ULTA should rebound. At least that’s my thought. |
Bottom Line |
 Ulta Salon is thriving as mall-based retailers encounter sagging sales. I think that’s a good thing as women will have to flock to Ulta Beauty stores of buy their makeup and stuff online. Personally, I feel its better to go into the stores so you can learn about new styles. The numbers continue to look great here, but I’m concerned about the high-volume selloffs. ULTA drops out of the Aggressive Growth Portfolio because the stock isn’t timely any more. I will continue to hold it in the Growth Portfolio, where it will rank here it will drop from 12th last qtr to 21st this qtr in the Power Rankings. |
Power Rankings |
Growth Stock Portfolio
21 of 35Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
