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

Zacks Equity Research

In the latest trading session, Ulta Beauty (ULTA) closed at $350.90, marking a -1.97% move from the previous day. This move lagged the S&P 500's daily gain of 0.11%. Elsewhere, the Dow gained 0.04%, while the tech-heavy Nasdaq added 0.19%.

Heading into today, shares of the beauty products retailer had gained 3.68% over the past month, lagging the Retail-Wholesale sector's gain of 5.17% and the S&P 500's gain of 4.42% in that time.

Wall Street will be looking for positivity from ULTA as it approaches its next earnings report date. On that day, ULTA is projected to report earnings of $3.06 per share, which would represent year-over-year growth of 16.35%. Our most recent consensus estimate is calling for quarterly revenue 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 $12.78 per share and revenue of $7.54 billion. These totals would mark changes of +17.79% and +12.21%, respectively, from last year.

Investors should also note any 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.

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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. ULTA is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note ULTA's current valuation metrics, including its Forward P/E ratio of 28. This valuation marks a premium compared to its industry's average Forward P/E of 11.74.

Investors should also note that ULTA has a PEG ratio of 1.52 right now. 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 1.92 at yesterday's closing price.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 60, which puts it in the top 24% 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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