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On 02 February 2019, Ulta Beauty, Inc. (NASDAQ:ULTA) announced its earnings update. Overall, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 13% in the upcoming year relative to the higher past 5-year average growth rate of 24%. With trailing-twelve-month net income at current levels of US$659m, we should see this rise to US$742m in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Ulta Beauty going to perform in the near future?
The view from 25 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for ULTA, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$659m and the final forecast of US$922m by 2022, the annual rate of growth for ULTA’s earnings is 10%. This leads to an EPS of $17.03 in the final year of projections relative to the current EPS of $11. In 2022, ULTA’s profit margin will have expanded from 9.8% to 10%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Ulta Beauty, there are three relevant aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Ulta Beauty worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Ulta Beauty is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Ulta Beauty? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.