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Comps Growth Likely to Fuel Ulta Beauty's (ULTA) Q2 Earnings

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Ulta Beauty, Inc. (ULTA - Free Report) is scheduled to release second-quarter fiscal 2019 results on Aug 29, after market close. This renowned beauty retailer has outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 1.4%.

Let’s see how the company is positioned ahead of the upcoming quarterly results.

Factors Likely to Add Sheen in Q2

Robust traffic and ticket growth are boosting Ulta Beauty’s revenues, as witnessed in fiscal first quarter.  Notably, the company’s mass cosmetics, skin care and fragrance categories have been attracting more consumers. Such trends have been fueling comparable sales (comps). In fact, management expects comps to rise nearly 6-7% in fiscal 2019. This boosts expectations for the upcoming quarterly results.

A strong omnichannel network has also been acting in favor of the company and supporting comps growth. Efforts to boost capabilities of online applications, investments to strengthen distribution network and prudent delivery facilities are boosting the company’s e-commerce sales. We expect online sales to keep rising in the second quarter and support the top line.

Additionally, Ulta Beauty’s loyalty program is a key business driver. Active members enrolled in this program have been expanding, backed by efficient marketing and merchandising endeavors. Such efforts along with new brand additions are likely to keep the sheen on the company’s loyalty program. Moreover, sales through gift cards have been robust. These upsides are likely to increase sales in the to-be-reported quarter.

The company’s effective strategies to boost business have been fueling gross margin rates for a while. The trend is likely to prevail and support earnings growth in the upcoming quarterly results.

Ulta Beauty Inc. Price, Consensus and EPS Surprise



Estimates Reveal Bright Prospects

The Zacks Consensus Estimate for earnings has been stable in the past 30 days at $2.79, which suggests a rise of 13.4% from the year-ago quarter’s reported figure. The consensus mark for revenues is at $1,676 million, which indicates an increase of 12.6% from the figure recorded in the year-ago quarter.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Ulta Beauty in the quarter to be reported. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Ulta Beauty carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Estimates

Here are some companies you may want to consider as our model shows that they have the right combination of elements to beat estimates.

Burlington Stores (BURL - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #2.

Dollar General (DG - Free Report) has an Earnings ESP of +2.64% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +0.30% and a Zacks Rank #3.

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