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Aggressive Growth

Sally Beauty Holdings (SBH - Snapshot Report) has extended its excellent earnings track record and now has 6 consecutive surprises.

Growth rates are looking great and shares remain attractively priced for this Zacks #2 Rank (Buy).

Company Description

Sally Beauty is a beauty retailer with over 4,000 stores, in addition to outside sales consultants, in North America and Europe.

Another Good Quarter

Last time Sally Beauty was featured in May it was coming off of its fifth consecutive surprise. On Aug 4 the company kept the streak alive, reporting EPS of $0.30, 2 cents better than expected. Net earnings jumped 36% to $55.8 million in the third quarter.

Sales were up almost 13% to $837 million. Same store sales rose 6% and the rest was due to acquisitions and new openings.

Analysts React

After the earnings surprise analysts unanimously raised their full-year estimates. The Zacks Consensus Estimate for 2011 is up 4 cents, to $1.05. Next year's average projection is up 3 cents, to $1.21.

In 2010 Sally Beauty made $0.77 per share, so the expected growth rates are 36% and 15%, respectively.

Not a Bad Value

Shares of SBH are going for about 15 times forward estimates, which puts the PEG ratio at 1.3. The P/S is coming in just under 1.0. None of these metrics will knock your socks off, but they are showing a decent price here.

Great Earnings Trend

The growth outlook for SBH is clearly illustrated in the chart below. Each colored line tracks a particular year's consensus estimates. See how it keeps getting higher year after year? And how it moves higher as the year goes on? That is exactly what you want to see.

Shares have dropped off recently, but looking at that earnings picture it looks like a fantastic time to buy.

Read the May 11th Feature Here

Sally Beauty - ticker SBH >
 
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Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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