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Ulta Beauty (ULTA) Gains As Market Dips: What You Should Know

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

In the latest trading session, Ulta Beauty (ULTA) closed at $347.89, marking a +1.59% move from the previous day. This change outpaced the S&P 500's 0.68% loss on the day. Elsewhere, the Dow lost 0.33%, while the tech-heavy Nasdaq lost 1.46%.

Coming into today, shares of the beauty products retailer had lost 2.4% in the past month. In that same time, the Retail-Wholesale sector lost 3.06%, while the S&P 500 lost 1.19%.

ULTA will be looking to display strength as it nears its next earnings release, which is expected to be May 30, 2019. In that report, analysts expect ULTA to post earnings of $3.06 per share. This would mark year-over-year growth of 16.35%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.74 billion, up 13.02% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $12.79 per share and revenue of $7.54 billion. These totals would mark changes of +17.88% and +12.21%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ULTA. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.06% higher within the past month. ULTA is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note ULTA's current valuation metrics, including its Forward P/E ratio of 26.78. Its industry sports an average Forward P/E of 11.17, so we one might conclude that ULTA is trading at a premium comparatively.

Also, we should mention that ULTA has a PEG ratio of 1.46. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ULTA's industry had an average PEG ratio of 1.89 as of yesterday's close.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 103, which puts it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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