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Ulta Beauty Inc ULTA

Morningstar Rating
$549.78 +5.72 (1.05%)
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Company Report

Narrow-Moat Ulta Overcomes a Challenging Economy Through Its Popularity and Beauty’s Strength

We think Ulta Beauty’s brand strength provides a narrow moat and has allowed the company to thrive despite the COVID-19 crisis and other external challenges. Over the past decade, Ulta has become the largest specialty beauty retailer in the United States through store openings, product and brand introductions, improved marketing, and—with more than 42 million active members—an enhanced loyalty program. Sales increased to $10.2 billion in 2022 from $912 million in 2007 as Ulta opened more than 1,000 stores, its shops became more productive, and its e-commerce developed. This success has made Ulta a desirable partner for prestige, mass, and emerging beauty brands. While the firm faces intense competition and is affected by innovation and product cycles in cosmetics, we think it has developed a following that has allowed it to take share from mall-based stores while competing effectively against wide-moat Amazon and other e-commerce. We believe teen girls and women like to sample products in Ulta’s stores and that its salons, selection, promotions, and service encourage frequent visitation.

Price vs Fair Value

ULTA is trading at a 42% premium.
Price
$549.78
Fair Value
$546.00
Uncertainty
Medium
1-Star Price
$846.55
5-Star Price
$288.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

As the largest specialty beauty retailer in the U.S., Ulta has access to leading brands and exclusive products. Its merchandising encourages frequent store visitation and draws shoppers from department stores.

Bears

Beauty products are available through many retail channels, putting Ulta in competition with the largest retailers in the U.S. Attracted by the favorable margins, some of them are expanding their beauty offerings.

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News

Trading Information

Previous Close Price
$544.06
Day Range
$544.99553.65
52-Week Range
$368.02556.60
Bid/Ask
$548.48 / $549.74
Market Cap
$26.70 Bil
Volume/Avg
371,804 / 697,476

Key Statistics

Price/Earnings (Normalized)
21.38
Price/Sales
2.43
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
4.46%

Company Profile

With 1,355 stores at the end of fiscal 2022 and a partnership with Target, Ulta Beauty is the largest specialized beauty retailer in the U.S. The firm offers makeup (42% of 2022 sales), fragrances, skin care, and hair care products (21% of 2022 sales), and bath and body items. Ulta offers private-label products and merchandise from more than 500 vendors. It also offers salon services, including hair, makeup, skin, and brow services, in all stores. Most Ulta stores are approximately 10,000 square feet and are in suburban strip centers. Ulta was founded in 1990 and is based in Bolingbrook, Illinois.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Mid Core
Total Number of Employees
53,000

Competitors

Valuation

Metric
ULTA
JWN
AMZN
Price/Earnings (Normalized)
21.3813.3460.19
Price/Book Value
12.634.368.79
Price/Sales
2.430.223.12
Price/Cash Flow
14.192.9218.59
Price/Earnings
ULTA
JWN
AMZN

Financial Strength

Metric
ULTA
JWN
AMZN
Quick Ratio
0.180.190.70
Current Ratio
1.521.000.98
Interest Coverage
1.937.45
Quick Ratio
ULTA
JWN
AMZN

Profitability

Metric
ULTA
JWN
AMZN
Return on Assets (Normalized)
23.84%4.27%9.11%
Return on Equity (Normalized)
64.30%58.03%26.76%
Return on Invested Capital (Normalized)
32.28%8.90%14.52%
Return on Assets
ULTA
JWN
AMZN
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