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Sally Beauty (SBH) Soars 13.6%: Is Further Upside Left in the Stock?

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Sally Beauty (SBH - Free Report) shares ended the last trading session 13.6% higher at $22.08. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 9.1% loss over the past four weeks.

Sally Beauty’s shares got a boost as analysts at Cowen and Oppenheimer upgraded their recommendation on the stock to Outperform, per media reports. Analysts are optimistic about the company’s sales and earnings prospects, as beauty salons have reopened in the United States. Also, increased inclination toward DIY personal care, higher demand for hair color and related products, as well as salon chair rental trends bodes well. Apart from this, the company is benefiting from its robust efforts to augment e-commerce business.

Notably, Sally Beauty’s global e-commerce sales surged 56% year over year during the second quarter of fiscal 2021. Management on its earnings call highlighted that nearly 40% of its e-commerce sales for Sally U.S. and Canada were fulfilled by stores during the quarter, thus highlighting the combined store and digital strength.  

This beauty products seller is expected to post quarterly earnings of $0.60 per share in its upcoming report, which represents a year-over-year change of +645.5%. Revenues are expected to be $968.15 million, up 37.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Sally Beauty, the consensus EPS estimate for the quarter has been revised 1.2% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on SBH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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