Is Ulta Beauty Stock ULTA a Good Investment?
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. While higher COVID-19 cases and the ensuing restrictions may hurt short-term results, affecting the stock price, for long-term investors that can ride out the volatility, the story remains compelling. Ulta’s loyal customer base, broadly appealing products, and growth potential make this a good investment.
The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock. It’s packed with all of the company’s key stats and salient decision making information. Including the Zacks Rank, Zacks Industry Rank, Style Scores, the Price, Consensus & Surprise chart, graphical estimate analysis and how a stocks stacks best cryptocurrency brokers up to its peers. Illinois-based Ulta sells more than 20,000 beauty products, from hair care to cosmetics, at its nearly 1,200 stores. It sells products at all price points, from budget elf Beauty (ELF) to luxury brand Givenchy. It competes with LVMH’s (LVMUY) Sephora, which focuses mostly on prestige brands like Burberry and Chanel.
- They order three times more than those who only shop at the stores.
- A change in margin can reflect either a change in business conditions, or a company’s cost controls, or both.
- It sells products at all price points, from budget elf Beauty (ELF) to luxury brand Givenchy.
- The Historical Cash Flow Growth is the longer-term (3-5 year annualized) growth rate of the cash flow change.
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The Zacks Equity Research reports, or ZER for short, are our in-house, independently produced research reports. The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. Investors can check out IBD Stock Lists and other IBD content to find the best stocks to buy or watch right now. Ulta Beauty has climbed above resistance and is forming a flat base. Its relative strength line is rebounding but still below recent highs.
Even Tractor Supply, another retailing winner, is valued at a cheaper 1.8 times sales. The spa and beauty products retailer crossed $10 billion in annual sales in fiscal 2022 even as profitability expanded for a second straight year. Overall, Ulta Beauty has a strong balance sheet, with both good liquidity and a conservative capital structure. This is a positive sign for investors, as it suggests that the company is well-positioned to withstand economic downturns and continue to grow in the future. It is much more profitable with its 17% operating profit margin.
Ulta also recently announced an agreement with Target, providing another distribution channel. The share price was down by more than 40% for the year back in March. However, the stock has recovered, and it is now up by 12% year-to-date. Management didn’t change its target of opening just 50 new stores this year, which implies a slightly conservative approach to the latest sales spike. Inflation has accelerated since the company issued its first official 2022 outlook, and new potential headwinds also include slowing economic growth.
The retailer is winning market share in that expanding niche, though, partly thanks to an effective merchandising strategy. Overall, I believe that Ulta Beauty is currently trading at a discount to its fair value. I have a price target of $407 per share and give Ulta Beauty a Buy rating. The debt-to-equity ratio is a measure of a company’s financial leverage. A debt-to-equity ratio of 0.97 is considered to be conservative, and it suggests that Ulta Beauty is not excessively reliant on debt to finance its operations.
ULTA Stock – Frequently Asked Questions
How to buy Ulta Beauty stock
This goes to show that when a company offers the right products, people will find a way to buy them. There’s also room for expansion, with management planning to bring its U.S. store total to a range of 1,500 to advantages of lexatrade 1,700 from the current 1,264. For starters, Ulta reopened all of its stores by the end of July. It also offered salon and brow services, which help draw customers, in 88% and 85% of the locations, respectively.
TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities. The EBITDA is a measure of a Ulta Beauty’s overall financial performance and is widely used to measure a its profitability.
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Ulta Beauty saw a increase in short interest in the month of September. As of September 30th, there was short interest totaling 1,750,000 shares, an increase of 43.4% from the September 15th total of 1,220,000 shares. Based on an average daily volume of 795,100 shares, the days-to-cover ratio is presently 2.2 days. For one, part of trading is being able to get in and out of a stock easily.
The Price to Book ratio or P/B is calculated as market capitalization divided by its book value. (Book value is defined as total assets minus liabilities, preferred stocks, and intangible assets.) In short, this is how much a company is worth. Investors use this metric to determine how a company’s stock price stacks up to its intrinsic value.
Investors benefit from these factors through a reduced risk of bankruptcy and the potential for higher stock prices and dividends. The 1 week price change reflects the collective buying and selling sentiment over the short-term. A strong weekly advance (especially when accompanied by increased volume) is a sought after metric for putting potential momentum stocks onto one’s radar. Others will look for a pullback on the week as a good entry point, assuming the longer-term price changes (4 week, 12 weeks, etc.) are strong.