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Ulta Beauty (ULTA) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Ulta Beauty (ULTA) closed the most recent trading day at $238.93, moving +0.45% from the previous trading session. This change outpaced the S&P 500's 0.19% gain on the day. At the same time, the Dow lost 0.11%, and the tech-heavy Nasdaq gained 0.81%.

Coming into today, shares of the beauty products retailer had gained 0.99% in the past month. In that same time, the Retail-Wholesale sector lost 0.29%, while the S&P 500 gained 0.56%.

ULTA will be looking to display strength as it nears its next earnings release, which is expected to be December 5, 2019. The company is expected to report EPS of $2.16, down 0.92% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.69 billion, up 8.46% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.96 per share and revenue of $7.40 billion, which would represent changes of +10.23% and +10.19%, respectively, from the prior year.

Any recent changes to analyst estimates for ULTA should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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 remained stagnant within the past month. ULTA currently has a Zacks Rank of #5 (Strong Sell).

Investors should also note ULTA's current valuation metrics, including its Forward P/E ratio of 19.9. For comparison, its industry has an average Forward P/E of 11.85, which means ULTA is trading at a premium to the group.

It is also worth noting that ULTA currently has a PEG ratio of 1.19. 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. The Retail - Miscellaneous was holding an average PEG ratio of 1.63 at yesterday's closing price.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 98, putting it in the top 39% 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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