ULTA Stock Study (10-15-25)
Posted by Mark on December 5, 2024 at 07:19 | Last modified: October 15, 2025 09:39I recently did a stock study on Ulta Beauty, Inc. (ULTA, $541.01). Previous studies are here, here, here, and here.
M* writes:
> Ulta Beauty is the largest specialized beauty retailer in the US
> with about 1,500 freestanding stores. The firm offers cosmetics
> (39% of 2024 sales), fragrances (13%), skin care (23%), and hair
> care products (19%). It also has salon services, including hair,
> makeup, skin, and brow, that account for about 4% of its revenue
> and drive traffic. Outside of the US, Ulta acquired premium beauty
> retailer Space NK and its 83 stores in the UK and Ireland in 2025,
> is opening franchised stores in Mexico, and has formed a joint
> venture to expand into the Middle East. In addition, Ulta collects
> royalties through its Target partnership (set to end in 2026) and
> credit card revenue.
Over the past decade, this large-size company grows sales and earnings at annualized rates of 12.0% and 19.5%. Lines are mostly up, straight, and parallel except for a sales+EPS dip in ’21 and EPS dip in ’25 [FY ends Jan 31; references to year from Value Line (VL) and BI website incremented to match]. Five- (10-) year EPS R^2 is 0.63 (0.54) and VL gives an Earnings Predictability score of 45.
Over the past decade, PTPM leads peer and industry averages by increasing from 12.9% (’16) to 14.0% (’25) with a last-5-year mean of 12.8%. ROE also leads peer and industry averages by increasing from 20.3% (’16) to 50.5% (’25) with a last-5-year mean of 46.5%. Debt-to-Capital is less than peer and industry averages despite increasing from 0% (’16) to 43.6% (’25) with a last-5-year mean of 48.4%.
Current Ratio is 1.39 and Quick Ratio is 0.21 per M* who assigns a “Narrow” Economic Moat, rates the company “Exemplary” for Capital Allocation, and gives a B grade for Financial Health. VL gives a B++ rating for Financial Strength. Interest Coverage is undefined as the company has no long-term debt.
With regard to sales growth:
- YF projects YOY 6.6% and 5.2% for ’26 and ’27, respectively (based on 22 analysts).
- Zacks projects YOY 6.8% and 5.3% for ’26 and ’27, respectively (9 analysts).
- VL projects 5.1% annualized growth from ’25-’30.
- CFRA projects 6.5% YOY and 5.2% per year for ’26 and ’25-’27, respectively.
- M* provides a 2-year ACE of 6.5% and projects 10-year annualized growth of 6.0% in its analyst note.
I am forecasting below the range at 5.0%.
With regard to EPS growth:
- MarketWatch projects annualized growth of 3.3% and 6.1% for ’25-’27 and ’25-’28, respectively (based on 28 analysts).
- Nasdaq.com projects 10.8% YOY and 14.0% per year for ’27 and ’26-’28 (13, 13, and 5 analysts for ’26, ’27, and ’28).
- Seeking Alpha projects 4-year annualized growth of 6.2%.
- Finviz provides ACE 5-year annualized growth of 5.8% (6).
- Argus projects 5-year annualized growth of 12.0%.
- YF projects YOY 3.4% contraction and 10.6% growth for ’26 and ’27 (19).
- Zacks projects YOY 4.0% contraction and 10.8% growth for ’26 and ’27 (13) along with 5-year growth of 7.5%/year.
- VL projects 6.4% annualized growth from ’25-’30.
- CFRA projects 3.3% YOY contraction and 1.5% growth per year for ’26 and ’25-’27 along with a 3-year CAGR of 1.0%.
- M* projects long-term annualized growth of 9.2%.
My 5.0% per year forecast is below the long-term-estimate range (mean of six: 7.9%). I will use ’25 EPS of $25.34/share as the initial value rather than 2026 Q2 EPS of $26.08 (annualized).
My Forecast High P/E is 21.0. Over the past 10 years, high P/E falls from 37.8 (’16) to 22.7 (’25) with a last-5-year mean of 22.2 (excluding 99.8 upside outlier in ’21) and a last-5-year-mean average P/E of 18.1 (also excluding ’21 low P/E). I am below the range.
My Forecast Low P/E is 12.0. Over the past 10 years, low P/E falls from 24.2 (’16) to 12.6 (’25) with a last-5-year mean (excluding 39.9 upside outlier in ’21) of 14.1. I am forecasting below the range.
My Low Stock Price Forecast (LSPF) of $304.10 is default based on initial value given above. This is 43.8% less than the last closing price and 1.6% less than the 52-week low.
These inputs land ULTA in the HOLD zone with a U/D ratio of 0.6. Total Annualized Return (TAR) is 4.7%.
PAR (using Forecast Average—not High—P/E) of NEGATIVE 0.3% is unacceptable as a potential stock investment. With a healthy margin of safety (MOS) I can proceed based on TAR, but even that is less than I seek from a large-size company.
To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 96 studies (my study and 21 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 4.5%, 5.8%, 21.8, and 14.1, respectively. I am lower except for sales (5.0%). VL’s projected average annual P/E of 18.0 is about equal to MS and higher than mine (16.5).
MS high / low EPS are $34.00 / $25.36 versus my $32.34 / $25.34 (per share). My high EPS is less due to a lower growth rate. VL’s high EPS of $34.60 is greater than both.
MS LSPF of $350.50 implies a Forecast Low P/E of 13.8: less than the above-stated 14.1. MS LSPF is 2.0% less than the default $25.36/share * 14.1 = $357.58 resulting in more conservative zoning. MS LSPF is 15.3% greater than mine, however.
With regard to valuation, PEG is 3.0 and 4.0 per Zacks and my projected P/E, respectively: significantly overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly elevated at 1.14.
MOS is robust because my inputs are near or below respective analyst/historical ranges and MS averages. MS TAR of 6.7% is 2.0% per year greater than mine.
VL notes the stock has surged ~40% since being upgraded to Timeliness rank of 1 in mid-May.
Per U/D, ULTA is a BUY under $412/share. BI TAR criterion is met ~ $339 given a forecast high price ~$679 (no dividend).
Disclaimer: I own shares in this security.
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