Ulta Beauty (ULTA) closed the latest trading day at $326.42, indicating a -0.26% change from the previous session's end. The stock's change was less than the S&P 500's daily gain of 1.04%. Meanwhile, the Dow experienced a rise of 0.76%, and the technology-dominated Nasdaq saw an increase of 1.03%. Shares of the beauty products retailer witnessed a loss of 17.32% over the previous month, trailing the performance of the Retail-Wholesale sector with its loss of 8.36% and the S&P 500's loss of 6.74%. Analysts a ...

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though? Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Ulta Beauty (ULTA) . Ulta currently has an average brokerage rec ...

Core Viewpoint - Ulta Beauty's stock is misclassified as part of the consumer discretionary sector, while it should be considered within the consumer staples sector due to the consistent demand for skincare and beauty products regardless of economic conditions [1]. Financial Performance - Ulta Beauty has a net income margin exceeding 11% and a return on invested capital (ROIC) rate of 29.6%, indicating strong financial efficiency [10]. - The company has a gross margin rate of over 42%, outperforming competitors like Target, which has a gross margin of 27.9% [20]. - Analysts forecast a 10.7% growth in earnings per share (EPS) for Ulta over the next 12 months, with J.P. Morgan raising the price target to $544, suggesting a potential rally of 47.2% from current levels [22]. Shareholder Returns - Ulta Beauty has allocated up to $289.4 billion for share buybacks, which is a tax-efficient way to return capital to shareholders [5]. - Management has guided for an additional $1 billion in share repurchases for the remainder of 2024, representing nearly 10% of the company's market capitalization [24]. Market Position - Ulta's stock has experienced a significant decline, trading at 64% of its 52-week high, which may present a buying opportunity for value investors [21]. - The company has a strong rewards membership program, contributing over 90% of its revenue, a benchmark not commonly seen in the retail sector [11]. Analyst Sentiment - Despite a "Moderate Buy" rating among analysts, Ulta was not included in a list of top stock recommendations by leading analysts [6][25]. - DekaBank Deutsche, Ulta's largest shareholder, increased its stake by 17.8% as of June 2024, bringing their total investment to $109.9 million [12].

Over the past month, shares of this beauty products retailer have returned -4.7%, compared to the Zacks S&P 500 composite's -0.3% change. During this period, the Zacks Retail - Miscellaneous industry, which Ulta falls in, has lost 9.6%. The key question now is: What could be the stock's future direction? Earnings Estimate Revisions Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earning ...

The upcoming earnings release of Ulta Beauty will be of great interest to investors. The company's upcoming EPS is projected at $5.51, signifying an 8.47% drop compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $2.62 billion, up 3.53% from the prior-year quarter. Coming into today, shares of the beauty products retailer had gained 4.67% in the past month. In that same time, the Retail-Wholesale sector gained 1.58%, while the S&P 500 gained 2 ...

Core Viewpoint - Analyst recommendations, particularly for Ulta Beauty (ULTA), are influential but may not be reliable indicators for investment decisions [1][2]. Group 1: Analyst Recommendations - Ulta has an average brokerage recommendation (ABR) of 1.80, indicating a consensus between Strong Buy and Buy, based on 25 brokerage firms [2]. - Out of the 25 recommendations, 16 are Strong Buy, accounting for 64% of the total recommendations [2]. - Despite the positive ABR, studies suggest limited success of brokerage recommendations in identifying stocks with the highest price increase potential [2][3]. Group 2: Limitations of Brokerage Recommendations - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [3][7]. - The ABR may not accurately reflect the actual price trajectory of a stock, making it more useful for validating independent research rather than as a standalone decision-making tool [4][7]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, which classifies stocks from 1 (Strong Buy) to 5 (Strong Sell), is based on earnings estimate revisions and is considered a more reliable indicator of near-term price performance compared to ABR [5][8]. - Unlike ABR, which may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates, providing a more accurate indication of future price movements [9]. Group 4: Current Earnings Outlook for Ulta - The Zacks Consensus Estimate for Ulta's earnings has decreased by 0.2% over the past month to $25.70, indicating growing pessimism among analysts regarding the company's earnings prospects [10]. - This decline in consensus estimates has resulted in a Zacks Rank of 4 (Sell) for Ulta, suggesting caution despite the Buy-equivalent ABR [11].

Core Viewpoint - Ulta Beauty's stock has experienced a significant decline, approximately 30% from its 52-week high, attributed to softer growth and a reset of expectations following a strong comparison period at the start of 2023 [11][3]. Company Performance - For the period ended May 4, Ulta Beauty reported year-over-year net sales growth of 3.5%, a slowdown from the previous year's 12.3% [5]. - The first-quarter earnings per share (EPS) were $6.47, down from $6.88 last year, but up from $6.30 in Q1 2022 [5]. - The company has adjusted its 2024 comparable sales growth outlook to between 2% and 3%, down from a prior forecast of 4% to 5% [13]. Market Positioning - Ulta Beauty's unique market positioning includes nearly 1,400 locations, in-store salons, and a strong online presence, which has redefined the beauty retail industry [15]. - The company's partnership with Target, featuring over 500 Ulta shop-in-shops, and a deal with DoorDash for delivery services highlight its omnichannel strategy [8]. Long-term Growth Potential - E-commerce sales have been robust, with 44 million loyalty program members indicating high engagement and repeat purchases [16]. - The company continues to open new stores and expand its ecosystem, presenting significant long-term growth opportunities [16]. Valuation - Ulta Beauty is currently trading under 16 times forward earnings based on the midpoint of management's 2024 EPS guidance, which is a discount compared to the average P/E ratio above 20 over the last three years [18].

Consumers were flush with cash coming out of the pandemic, which boosted Ulta's business. However, those tailwinds have faded. Sales growth has steadily slowed since peaking in 2021, while gross profit margins peaked in late 2022: The selling has gone far enough This could be the best opportunity to buy this stock in years. Although the stock had reasons for slipping, the stock market often gets overzealous. There's a solid argument that Ulta Beauty's selling has gone too far, and shares are poised to rebou ...

Core Insights - Ulta Beauty has transformed the beauty retail landscape by combining mass, prestige, and luxury brands in an engaging shopping environment, leading to significant profitable growth [1] - The company is navigating a challenging environment in fiscal 2024, facing increased competition, soft merchandise margins, and rising SG&A expenses [2] Strategic Focus - The company's growth potential is enhanced by focusing on five key areas: product assortment, social relevance, digital experiences, loyalty program, and promotional strategies [3] - Comp growth is expected to be in the low single-digit range in the first half of fiscal 2024, with an acceleration to 2% to 4% in the second half, supported by new sales initiatives and a strong product pipeline [4] Market Performance - Ulta Beauty has gained market share in major beauty categories, particularly skincare, which saw mid-single-digit comp growth in the first quarter of fiscal 2024, driven by consumer interest in self-care and new product launches [7] - The company has effectively increased traffic growth in both physical and digital channels through enhanced marketing investments [6] Financial Outlook - SG&A expenses are projected to rise by mid-to-high-single digits in fiscal 2024, leading to a decrease in operating margin guidance to between 13.7% and 14% [9][10] - The gross margin is expected to decline modestly due to soft merchandise margins and fixed cost deleverage [10] Long-term Positioning - Despite anticipated growth moderation and competitive pressures, Ulta Beauty is well-positioned to maintain and expand its leadership in the beauty industry, supported by a strong culture and team [11]

Ulta reported revenues of $2.73 billion in the last reported quarter, representing a year-over-year change of +3.5%. EPS of $6.47 for the same period compares with $6.88 a year ago. 12 Month EPS Ulta is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade. Over the past month, shares of this beauty products retailer have returned +1.1%, compared to the Zacks S&P 500 composite's +3.6% change ...