Stock (Symbol) |
Ulta Salon (ULTA) |
Stock Price |
$226 |
Sector |
| Retail & Travel |
Data is as of |
| January 30, 2018 |
Expected to Report |
| Mar 15 |
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) is well off its highs of over $300 it set in June of 2017, even though sales and profits are growing strong. 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, and ULTA also buys back stock. Still, analysts have soured on the stock, thinking margins will erode with online competition from Amazon. And last qtr there were a few negatives, namely that profits, sales, online sales and same store sales growth slowed from the prior qtr. Online competition is something to monitor. Two qtrs ago call management actually said profit margins will rise next year, and people didn’t believe him. With profits expected to climb an average of 30% the next 4 qtrs, this stock seems like a bargain with a P/E of 21. But I may be missing the big picture here as I’ve been bullish on the stock as its been been trending down. |
One Year Chart |
 Last qtr ULTA delivered profit growth of 25% which beat estimates of 19%. The P/E just came down from 35 3QtrsAgo to 24 this qtr. But profit growth has decelerated too, so the should have fallen. 2018 estimates did increase from $1.86 to $10.65 this qtr, which is a positive. Qtrly profit Estimates call for 25%, 33%, 33% and 31% profit growth the next 4 qtrs — great! This stock’s deffinitely worth 21x earnings to me. |
Fair Value |
 My Fair Value on this stock is a P/E of 27, which gives the stock huge upside at this level. So much that I wonder if I’m missing something here. |
Bottom Line |
 Ulta Salon has been a great stock for the last decade, and its easy for me to stand behind the stock when profits are expected to climb 30% in the future. I feel the P/E of21 is way too low for this stock, and I expect ULTA to rebound higher in a big way. But I could be wrong — the trend is your friend and the trend is down. ULTA ranks 25th in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
25 of 39Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
