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Why Ulta Beauty (ULTA) Dipped More Than Broader Market Today

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Ulta Beauty (ULTA - Free Report) ended the recent trading session at $510.06, demonstrating a -2.25% change from the preceding day's closing price. This change lagged the S&P 500's daily loss of 1.12%. Elsewhere, the Dow lost 0.84%, while the tech-heavy Nasdaq lost 1.9%.

The stock of beauty products retailer has fallen by 7.77% in the past month, lagging the Retail-Wholesale sector's gain of 1.86% and the S&P 500's gain of 1.26%.

Market participants will be closely following the financial results of Ulta Beauty in its upcoming release. The company is predicted to post an EPS of $4.47, indicating a 13.04% decline compared to the equivalent quarter last year. Alongside, our most recent consensus estimate is anticipating revenue of $2.71 billion, indicating a 7.12% upward movement from the same quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $24.36 per share and a revenue of $12.06 billion, demonstrating changes of -3.87% and +6.13%, respectively, from the preceding year.

Any recent changes to analyst estimates for Ulta Beauty should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.12% upward. Right now, Ulta Beauty possesses a Zacks Rank of #2 (Buy).

Digging into valuation, Ulta Beauty currently has a Forward P/E ratio of 21.42. Its industry sports an average Forward P/E of 15.22, so one might conclude that Ulta Beauty is trading at a premium comparatively.

It is also worth noting that ULTA currently has a PEG ratio of 2.87. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The average PEG ratio for the Retail - Miscellaneous industry stood at 2.56 at the close of the market yesterday.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 68, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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