Stock Spotlight: Ulta Salon, Cosmetics & Fragrance Inc.
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) is a beauty retailer that focuses on salon products and salon services and offers more than 21,000 beauty products. Its stock is down today after coming up short on revenue in Q3. Despite this, ULTA still beat on a per-share basis, with earnings over $0.42 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.38. Revenues also rose 21.8% year/year and same store sales for Q3 were up 9.6% vs guidance of +6-8%. This is ULTA's 12th straight double-digits sales beat, showing that Ultra Salon, Cosmetics & Fragrance Inc. is still an amazing company and in essence, a terrific buy.
For starters, Ulta Salon, Cosmetics & Fragrance Inc. reported an EPS today that was up 68% compared to the third quarter EPS report last year. This shows momentum, and the fact that the average EPS Growth of the last 3 quarters is 60% shows that ULTA has solid financial footing and is prospering. Looking from a broader perspective, ULTA has a 3 year EPS Growth Rate of 59%. Interestingly, the 3 year EPS Growth Rate and the average EPS Growth of the last 3 quarters are nearly equivalent to each other, signaling that ULTA is a beacon of consistent growth. ULTA also has had 2 consecutive years of EPS growth and its estimated annual earnings growth for the current fiscal year is up 45% from last year's estimates.
ULTA also has solid sales growth that, while not as spectacular as its EPS growth, signify a strong consumer desire for ULTA's products and a sizeable market niche that ULTA has created in order to effectively compete. It reported sales today that, when compared to the same 3Q sales of last year, were up 23%. The 3 year Sales Growth Rate is 16%, which, although modest, is satisfactory, especially coupled up with other factors of ULTA's financial balance sheet; ULTA also has no debt, and a strong ROE (Return On Equity) of 21.2%.
Ulta Salon, Cosmetics & Fragrance Inc. is a solid growth company whose stock fulfills the vast majority of the CAN SLIM requirements. Combine this with the fact that analysts such as Ken Perkins, president of the consulting firm Retail Metrics, see strong growth in the services sector (particularly among those catering to women), and you can see why Ulta Salon, Cosmetics & Fragrance Inc. is a terrific buy.