Beauty market

Ulta Beauty (ULTA) Stock Sinks As Market Gains: What You Need To Know

ILast trading session, Ulta Beauty (ULTA) closed at $374.48, marking a -0.97% move from the previous day. This change lagged the S&P 500’s 0.08% gain on the day. Meanwhile, the Dow Jones lost 0.56% and the tech-heavy Nasdaq lost 0.42%.

Going into today, shares of the beauty retailer had lost 1.82% over the past month, outpacing the retail and wholesale sector’s 3.94% loss and at trailing the S&P 500’s 0.22% gain over this period.

Wall Street will be looking for positivity from Ulta Beauty as it nears its next earnings report date. In this report, analysts expect Ulta Beauty to post earnings of $4.48 per share. This would mark a year-over-year growth of 31.38%. Our most recent consensus estimate calls for quarterly revenue of $2.7 billion, up 22.59% from the prior year period.

Zacks consensus estimates for the full year for ULTA call for earnings of $17.15 per share and revenue of $8.6 billion. These results would represent year-over-year variations of +268.03% and +39.75%, respectively.

It’s also important to note recent changes to analyst estimates for Ulta Beauty. These recent revisions tend to reflect the evolving nature of short-term trading trends. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes into account these estimation changes and provides a clear and actionable scoring model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 The Zacks Consensus EPS estimate has remained flat over the past month. Ulta Beauty currently sports a Zacks rank of #1 (Strong Buy).

Valuation is also important, so investors should note that Ulta Beauty has a forward P/E ratio of 22.05 at this time. This represents a premium to its industry average Forward P/E of 12.75.

Investors should also note that ULTA has a PEG ratio of 1.34 at this time. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. Retail – Miscellaneous had an average PEG ratio of 0.67 at yesterday’s closing price.

The Retail – Miscellaneous industry is part of the Retail – Wholesale sector. This group has a Zacks industry ranking of 74, which places it in the top 30% of over 250 industries.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.