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Ulta Beauty Inc. (ULTA) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Ulta Beauty (ULTA - Free Report) ? Shares have been on the move with the stock up 8.3% over the past month. The stock hit a new 52-week high of $525.89 in the previous session. Ulta Beauty has gained 11.6% since the start of the year compared to the 13.4% move for the Zacks Retail-Wholesale sector and the 10.9% return for the Zacks Retail - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on December 1, 2022, Ulta reported EPS of $5.34 versus consensus estimate of $4.09.
For the current fiscal year, Ulta is expected to post earnings of $24.19 per share on $9.98 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $26.33 per share on $10.77 billion in revenues. This represents a year-over-year change of 5.74% and 7.84%, respectively.
Valuation Metrics
Ulta may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ulta has a Value Score of B. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 21.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.2X. On a trailing cash flow basis, the stock currently trades at 22.6X versus its peer group's average of 7X. Additionally, the stock has a PEG ratio of 1.57. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ulta currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ulta fits the bill. Thus, it seems as though Ulta shares could have potential in the weeks and months to come.
How Does ULTA Stack Up to the Competition?
Shares of ULTA have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Arhaus, Inc. (ARHS - Free Report) . ARHS has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Arhaus, Inc. beat our consensus estimate by 80%, and for the current fiscal year, ARHS is expected to post earnings of $0.88 per share on revenue of $1.23 billion.
Shares of Arhaus, Inc. have gained 43.1% over the past month, and currently trade at a forward P/E of 16.47X and a P/CF of 19.23X.
The Retail - Miscellaneous industry may rank in the bottom 69% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ULTA and ARHS, even beyond their own solid fundamental situation.
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Ulta Beauty Inc. (ULTA) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Ulta Beauty (ULTA - Free Report) ? Shares have been on the move with the stock up 8.3% over the past month. The stock hit a new 52-week high of $525.89 in the previous session. Ulta Beauty has gained 11.6% since the start of the year compared to the 13.4% move for the Zacks Retail-Wholesale sector and the 10.9% return for the Zacks Retail - Miscellaneous industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on December 1, 2022, Ulta reported EPS of $5.34 versus consensus estimate of $4.09.
For the current fiscal year, Ulta is expected to post earnings of $24.19 per share on $9.98 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $26.33 per share on $10.77 billion in revenues. This represents a year-over-year change of 5.74% and 7.84%, respectively.
Valuation Metrics
Ulta may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Ulta has a Value Score of B. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 21.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.2X. On a trailing cash flow basis, the stock currently trades at 22.6X versus its peer group's average of 7X. Additionally, the stock has a PEG ratio of 1.57. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Ulta currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Ulta fits the bill. Thus, it seems as though Ulta shares could have potential in the weeks and months to come.
How Does ULTA Stack Up to the Competition?
Shares of ULTA have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Arhaus, Inc. (ARHS - Free Report) . ARHS has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Arhaus, Inc. beat our consensus estimate by 80%, and for the current fiscal year, ARHS is expected to post earnings of $0.88 per share on revenue of $1.23 billion.
Shares of Arhaus, Inc. have gained 43.1% over the past month, and currently trade at a forward P/E of 16.47X and a P/CF of 19.23X.
The Retail - Miscellaneous industry may rank in the bottom 69% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for ULTA and ARHS, even beyond their own solid fundamental situation.