Ulta Beauty (ULTA) Laps the Stock Market: Here's Why

Ulta Beauty (ULTA) closed at $553.36 in the latest trading session, marking a +2.58% move from the prior day. This change outpaced the S&P 500’s 1.2% gain on the day. On the other hand, the Dow registered a gain of 1.79%, and the technology-centric Nasdaq increased by 1.52%.

Shares of the beauty products retailer witnessed a gain of 1% over the previous month, trailing the performance of the Retail-Wholesale sector with its gain of 6.55%, and the S&P 500’s gain of 5.15%.

Market participants will be closely following the financial results of Ulta Beauty in its upcoming release. The company is forecasted to report an EPS of $6.94, showcasing a 3.58% upward movement from the corresponding quarter of the prior year. At the same time, our most recent consensus estimate is projecting a revenue of $3.08 billion, reflecting a 8.16% rise from the equivalent quarter last year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $28.41 per share and a revenue of $13.22 billion, indicating changes of +10.8% and +6.67%, respectively, from the former year.

Investors should also note any recent changes to analyst estimates for Ulta Beauty. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, upbeat changes in estimates indicate analysts’ favorable outlook on the business health and profitability.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 0.01% lower. Ulta Beauty is currently a Zacks Rank #3 (Hold).

Looking at valuation, Ulta Beauty is presently trading at a Forward P/E ratio of 18.99. This denotes a premium relative to the industry average Forward P/E of 16.

One should further note that ULTA currently holds a PEG ratio of 1.98. 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 average PEG ratio for the Retail – Miscellaneous industry stood at 1.8 at the close of the market yesterday.

The Retail – Miscellaneous industry is part of the Retail-Wholesale sector. With its current Zacks Industry Rank of 154, this industry ranks in the bottom 37% of all industries, numbering over 250.