ULTA Ulta Beauty

Sector financial performance:

This company, primarily a retailer of beauty supplies including cosmetics, fragrance, hair care, skin care and solon service, has been grouped into beauty supplies retail sector in personal care industry.
It seems that demand for products and service of companies in this sector has been solid as indicated by the growth in the same store sales (average 3-8% annual rate) in the past three years, which can be attributable more on increasing transaction size than increasing transaction. However, when come to the individual retailers companies in this sector have performed differently since 2017 as seen from their slowing down store traffic. Some of companies’ sales of store went down largely due to slowing down traffic. E-commerce has grown very fast (50-60% annual growth rate).
The average gross margin from the typical companies is about 43% in 2017. The typical operating margin is now at about 13% with a SG&A as percentage of sales of about 29%.
The typical average stock Price/cash flow ratio is: 17 (interest/EBI ratio of 18%) and stock price/sales ratio is about 1.4.

 

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Company performance:

It seems that the demand for products/service of this company in the past several years has been very strong as indicated by the continuingly increased same stores sales (7-13% annually) and e-commerce sales (50-60% annual), which have been driven by the increase in both transaction amounts and traffic.
The fiscal 2017 compared with 2016
Same store sales increased 11% attributable to increase of 6.7% in transaction and increase of 4.3% in average ticket.
Comparable sales of store and salon service increased 7%.
Comparable sales of e-commerce increased 60%.
2016 compared with 2015
Same store sales increased 16% attributable to increase of 10.7% in transactions and increase of 5% in average ticket.
Comparable sales of store and salon service increased 13.4%.
Comparable sales of e-commerce increased 56%.
2015 compared with 2014
Same store sales increased 12% attributable to increase of 8.4% in transaction and increase of 3.4% in average ticket.
Comparable sales of store and salon service increased 10%.
Comparable sales of e-commerce increased 48%.
Its gross margin has been flat at around 36% since 2014. With its constant SG&A as percentage of sales (around 22%), its operating margin went up to about 14% in 2017.

Stock performance

This stock currently has a stock price/cash flow ratio of 26. We think that its stock is being relatively fairly valued compared with its peers.

 

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