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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 $335.25, moving +1.52% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.8%. Meanwhile, the Dow gained 0.82%, and the Nasdaq, a tech-heavy index, added 1.14%.

Coming into today, shares of the beauty products retailer had lost 6.7% in the past month. In that same time, the Retail-Wholesale sector lost 3.96%, while the S&P 500 lost 3.2%.

ULTA will be looking to display strength as it nears its next earnings release, which is expected to be May 30, 2019. The company is expected to report EPS of $3.06, up 16.35% from the prior-year quarter. 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 should also note any recent changes to analyst estimates for ULTA. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection has moved 0.06% higher. ULTA is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that ULTA has a Forward P/E ratio of 25.83 right now. Its industry sports an average Forward P/E of 11.25, so we one might conclude that ULTA is trading at a premium comparatively.

It is also worth noting that ULTA currently has a PEG ratio of 1.4. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Miscellaneous was holding an average PEG ratio of 1.85 at yesterday's closing price.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 108, putting it in the top 43% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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