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What's in the Offing for Ulta Beauty (ULTA) in Q4 Earnings?

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Ulta Beauty, Inc. (ULTA - Free Report) is likely to witness a year-over-year increase in the top and bottom lines when it reports fourth-quarter fiscal 2021 earnings on Mar 10. The Zacks Consensus Estimate for revenues is pegged at $2,701 million, suggesting a rise of 22.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Ulta Beauty’s earnings has risen by 2 cents over the past 30 days to $4.59 per share, indicating growth of 34.6% from the figure reported in the prior-year period. This beauty products retailer has a trailing four-quarter earnings surprise of about 76%, on average. ULTA delivered an earnings surprise of around 57% in the last reported quarter.

For fiscal 2021, the Zacks Consensus Estimate for revenues stands at $8.6 billion, suggesting a 39.8% increase from the year-ago period’s reported figure. The consensus mark for earnings per share (EPS) is pegged at $17.17 compared with $4.66 reported in fiscal 2020.

Ulta Beauty Inc. Price, Consensus and EPS Surprise

Ulta Beauty Inc. Price, Consensus and EPS Surprise

Ulta Beauty Inc. price-consensus-eps-surprise-chart | Ulta Beauty Inc. Quote

Key Factors to Consider

Ulta Beauty has been benefiting from its strength in the skincare category, revival in the makeup category as well as a focus on six strategic priorities. These include solidifying the omnichannel business and exploring the potential of both physical and digital facets, undertaking various tools to enhance the experience of guests, offering customers an exclusive range of beauty products through innovation, deepening customer engagement by boosting rewards and loyalty programs, optimizing the cost structure and boosting organizational talent.

Talking of skincare, the category has been gaining on consumers’ rising interest in self-care as well as the company’s focus on newness and innovation. Ulta Beauty is also seeing strength in the fragrance and haircare category.

Speaking of omnichannel, management remains on track with expanding capacity at fulfillment centers, the expansion of ship from store capabilities as well as curbside pickups. ULTA is also benefiting from its mobile app and virtual try-on capabilities. During the third quarter, the company made several efforts to enrich its omnichannel experience by introducing Beauty to Go, collaborating with DoorDash and rolling out same-day delivery in various states, launching two unique salon services across all stores and relaunching skin services in certain stores and launching Ulta Beauty at Target across 92 stores and online. These upsides are likely to have worked well in the quarter to be reported.

On its third-quarter earnings call, the company stated that it was impressed with its year-to-date performance as well as solid trends experienced so far in the fiscal fourth quarter. Despite the dynamic operating landscape and uncertainties amid the pandemic, Ulta Beauty raised its fiscal 2021 view. It expects net sales in the range of $8.5-$8.6 billion. Comps growth is expected in the range of 36-37%.. Management expects the operating margin between 14.3% and 14.5%. Growth in the operating margin is likely to have been driven by an expansion in the gross margin, which, in turn, is expected to have benefited from fixed cost leverage, a better merchandise margin, lower salon costs and reduced headwinds related to the channel shift. Earnings are envisioned in the range of $16.7-$17.1 per share.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for ULTA this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Ulta Beauty currently has a Zacks Rank #3 and an Earnings ESP of -0.85%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Casey's General Stores (CASY - Free Report) has an Earnings ESP of +5.19% and a Zacks Rank #2. It is anticipated to register a top-line increase when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for Casey's General Stores’ revenues is pegged at $3.1 billion, indicating a rise of 52.3% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Casey's General Stores’ quarterly earnings is pegged at $1.45 per share, suggesting an improvement of 39.4% from the year-ago quarter’s reported figure. CASY delivered an earnings beat of 20.1%, on average, in the trailing four quarters.

Dollar General (DG - Free Report) has an Earnings ESP of +0.68% and a Zacks Rank of 3. It is likely to register a bottom-line decrease when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for EPS of $2.56 suggests a fall of 2.3% from the year-ago quarter’s reported figure.

Dollar General’s top line is expected to rise from the year-earlier quarter’s reported figure. The Zacks Consensus Estimate for quarterly revenues is pegged at $8.7 billion, which indicates an improvement of 3.3% from the figure reported in the prior-year quarter. DG has a trailing four-quarter earnings surprise of 8.8%, on average.

Dave & Buster's (PLAY - Free Report) has an Earnings ESP of +15.00% and a Zacks Rank #3. The company is expected to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for Dave & Buster's quarterly EPS of 60 cents suggests significant growth from the year-ago quarter’s reported figure of a loss of $1.19.

The consensus mark for revenues is pegged at $368.1 million, indicating a massive increase of 215.1% from the year-ago quarter. PLAY has a trailing four-quarter earnings surprise of 218.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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