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Ulta Beauty (ULTA - Free Report) is a leading beauty retailer in the United States. The company offers a wide range of products, including cosmetics, fragrances, skincare, hair care, bath and body products, and salon styling tools in stores.
Analysts have taken a bearish stance on the stock’s outlook, lowering their earnings expectations across the board and landing it into an unfavorable Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
In addition, the company is in the Zacks Retail – Miscellaneous industry, which is currently ranked in the bottom 42% of all Zacks industries. Let’s take a closer look at the company.
Ulta's Growth Cools
ULTA shares have been hit hard in 2024, down nearly 25% and widely underperforming relative to the S&P 500. Quarterly results haven’t ushered in positivity, with its shares seeing negative post-earnings reactions regularly as of late.
Perhaps to the surprise of some, ULTA shares are essentially flat over the last three years following its insane run and subsequent cooldown, up just a marginal 0.8% overall.
Image Source: Zacks Investment Research
While the company’s top line performance has largely remained constructive over recent years, regularly seeing year-over-year growth, the growth rates have cooled significantly. The overwhelmingly bearish share performance seems to largely be driven by this growth slowdown, which we can see in the chart below.
Please note that the chart tracks the % YoY change, not actual sales numbers.
Image Source: Zacks Investment Research
The stock traded at high multiples for some time before the growth slowdown, with the current 16.1X forward 12-month earnings multiple a bargain relative to five-year highs of 80.8X. Investors took note of the slowing growth, as reflected by the valuation multiple cratering.
Bottom Line
Slowing growth paints a challenging picture for the company’s shares in the near term.
Ulta Beauty (ULTA - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
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Bear of the Day: Ulta Beauty (ULTA)
Ulta Beauty (ULTA - Free Report) is a leading beauty retailer in the United States. The company offers a wide range of products, including cosmetics, fragrances, skincare, hair care, bath and body products, and salon styling tools in stores.
Analysts have taken a bearish stance on the stock’s outlook, lowering their earnings expectations across the board and landing it into an unfavorable Zacks Rank #5 (Strong Sell).
Image Source: Zacks Investment Research
In addition, the company is in the Zacks Retail – Miscellaneous industry, which is currently ranked in the bottom 42% of all Zacks industries. Let’s take a closer look at the company.
Ulta's Growth Cools
ULTA shares have been hit hard in 2024, down nearly 25% and widely underperforming relative to the S&P 500. Quarterly results haven’t ushered in positivity, with its shares seeing negative post-earnings reactions regularly as of late.
Perhaps to the surprise of some, ULTA shares are essentially flat over the last three years following its insane run and subsequent cooldown, up just a marginal 0.8% overall.
Image Source: Zacks Investment Research
While the company’s top line performance has largely remained constructive over recent years, regularly seeing year-over-year growth, the growth rates have cooled significantly. The overwhelmingly bearish share performance seems to largely be driven by this growth slowdown, which we can see in the chart below.
Please note that the chart tracks the % YoY change, not actual sales numbers.
Image Source: Zacks Investment Research
The stock traded at high multiples for some time before the growth slowdown, with the current 16.1X forward 12-month earnings multiple a bargain relative to five-year highs of 80.8X. Investors took note of the slowing growth, as reflected by the valuation multiple cratering.
Bottom Line
Slowing growth paints a challenging picture for the company’s shares in the near term.
Ulta Beauty (ULTA - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.