Down 30% From Its 52-Week High, Is Now the Time to Buy Ulta Beauty Stock?

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].