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

Zacks Equity Research

Ulta Beauty (ULTA) closed the most recent trading day at $243.99, moving -0.58% from the previous trading session. This move lagged the S&P 500's daily gain of 0.07%. Meanwhile, the Dow 0%, and the Nasdaq, a tech-heavy index, lost 0.29%.

Coming into today, shares of the beauty products retailer had gained 3.54% in the past month. In that same time, the Retail-Wholesale sector gained 4.44%, while the S&P 500 gained 4.3%.

Investors will be hoping for strength from ULTA as it approaches 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%. Meanwhile, our latest consensus estimate is calling for revenue of $1.69 billion, up 8.46% from the prior-year quarter.

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.

Any recent changes to analyst estimates for ULTA should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ULTA is currently a Zacks Rank #4 (Sell).

In terms of valuation, ULTA is currently trading at a Forward P/E ratio of 20.53. Its industry sports an average Forward P/E of 11.93, so we one might conclude that ULTA is trading at a premium comparatively.

Also, we should mention that ULTA has a PEG ratio of 1.23. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Miscellaneous industry currently had an average PEG ratio of 1.64 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 169, which puts it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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