Ulta Salon, Cosmetics, & Fragrance, Inc.

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA - Snapshot Report) continues to aggressively expand its footprint across the U.S. The beauty retailer and salon is also coming of off its third earnings surprise and is priced at a reasonable PEG ratio of 0.58.

Company Description

Ulta provides full-salon services in addition to both prestige and mass salon products. The salons offer the experience and environment of a specialty retailer at the value and convenience of a beauty superstore. Products include cosmetics, skin care, bath and beauty products, fragrances, and much more.

Currently the company operates more than 280 locations in 32 states and also sells through its Web site. Ulta is headquartered in Bollingbrook, Illinois, has 4,000 employees, and carries a market cap of $580 million.

A Third Consecutive Surprise

On Sep 4 the company announced its third earnings surprise in as many quarters, averaging 13% per surprise. The compnay reported Earnings per share of 6 cents while analysts were expecting a nickel.

ULTA reported net sales of $249 million, a 24% year-over-year increase. The company opened more than 70 new locations since the second quarter of 2007 and also saw same-store sales increase 3.7%.

Impressive Growth

Full-year earnings estimates for the next fiscal year are currently 69 cents per share, a growth rate of 28%. While the stock is trading at a slightly high P/E for its industry, near 15 times earnings, the 25.7% long-term growth rate yields a great PEG ratio of 0.58.

In a Sep 25 Reuters article, CEO Lyn Kirby reiterated plans to increase Ulta's store count to 1,000 by 2017, more than triple the current number of locations.

The Chart

Ulta went public in Oct 2007 and sold off sharply with the market. It is common to see high volatility in new issues, but shares seem to have calmed down and developed a support level near $10 per share. Take a look at the chart below.

Read the full analyst report on ULTA