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

Zacks Equity Research

In the latest trading session, Ulta Beauty (ULTA) closed at $231.21, marking a +1.03% move from the previous day. This change outpaced the S&P 500's 0.75% gain on the day. Meanwhile, the Dow gained 0.69%, and the Nasdaq, a tech-heavy index, added 1.32%.

Prior to today's trading, shares of the beauty products retailer had lost 4.21% over the past month. This has lagged the Retail-Wholesale sector's gain of 0.59% and the S&P 500's gain of 3.42% in that time.

ULTA will be looking to display strength as it nears its next earnings release, which is expected to be December 5, 2019. On that day, ULTA is projected to report earnings of $2.15 per share, which would represent a year-over-year decline of 1.38%. Our most recent consensus estimate is calling for quarterly revenue of $1.69 billion, up 8.46% from the year-ago period.

ULTA's full-year Zacks Consensus Estimates are calling for earnings of $11.96 per share and revenue of $7.40 billion. These results would represent year-over-year changes of +10.23% and +10.19%, respectively.

It is also important to note the recent changes to analyst estimates for ULTA. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. 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 19.11 right now. Its industry sports an average Forward P/E of 11.24, so we one might conclude that ULTA is trading at a premium comparatively.

Also, we should mention that ULTA has a PEG ratio of 1.14. 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 1.55 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 96, which puts it in the top 38% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow ULTA in the coming trading sessions, be sure to utilize Zacks.com.


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