+ Watch ULTA
on My Watchlist
Goldman Sachs likes it, PEG is a reasonable 1.2-1.3, P/E is below peers, and the company's e-commerce side is looking promising. Plus, let's be honest, every woman loves this place.
Every woman I know loves, shops at, and spends money at Ulta. The strong popularity of this cosmetics store will pay off, especially since it's the only pure-play chain in the makeup industry.
Price has come down to my range
I'm following MDP pick on this one.
Bottomed out. Forward P/E of 22 is too low for a growth company in this stage. Bump on the road = opportunity.
I am not an expert in this business, but the last earnings report was nothing to scoff at. Operating cash flow has increased to $100.13 million so far this year, compared to $77.46 million at the same time last year. Earnings have increased over 22% this year as well, accompanied by a 23.3% increase in revenue. The company has no debt, with $240.92 million in cash. Mary Dillon, the company's new CEO appointed in June, strikes me as a competent leader focused on attracting new customers and building customer loyalty. The company now has 664 stores in the U.S. after opening 55 in the most recent quarter. So far in 2013 the same-store sales have increased 7.3%.Ulta Salon has the financial strength to endure short-term hiccups. Boo hoo for analysts and short-term traders who are disappointed with the results of one quarter (and short-term projections based on a tough retail environment). The company's store growth, comps growth, and cash flow/earnings generation help me see this recent drop as a great opportunity to rate this as a long-term outperform. The P/E is hovering around 31, providing an opportunity to pick up a growth company at a reasonable price. I don't know a whole lot about the business, but will be looking into it more. So far I like what I see: a quality growth company getting unnecessarily beat up by a short-sighted market.Outperform.
Too big a drop after news from this quarter & re next.
Getting in on a hard pullback. They forecasted estimates below consensus for the holidays, saying promotion are to blame. My guess is more reports like this will be heard come Q4 results. I plan on buying many of my favorites as they get hit on short term noise. This one should still be a long term winner.
Ulta offers a combination of convenience, variety, and customer service in an off-mall format that lets busy customers get in and out quickly. It is only partway through its planned store buildout and its online sales are growing, which means gains ahead.
It is candy store for women. They have a great rewards program and frequent sales. They carry great product lines in one convenient area, appeal to all age groups, have fairly well trained sales staff, the stores are well staffes at all times. It's Nirvana for womens who wear make-up.
beaten down because of CEO exit.
Just realized I never added Ulta to CAPS! I pretty much doubled my position during last Friday's drop. CEO departure doesnt really concern me all that much, as he is not needed to continue the successful expansion plan. They have years and years of grow ahead. Expand without taking on debt, good cash flows. It becomes fairly easy to add to your existing holdings after you have followed a company over the years. You can then spot an opportunity and seize on it easily.
Plans on opening 125 stores this year and trades at a forward PE of 17 for 25-30% EPS growth. Plus when they find a CEO that will be a strong catalyst to push the stock back above 80.
It will spring back
The stock has been pummeled over the past couple of days. Below $85 represents a good buy in point for a company with a great long-term EPS growth rate and zero debt.
CEO leaving has exaggerated effect on the market. Been waiting for better entry point for this stock. Think this is it.
Ulta was entered into my caps at $87.82. The PE ratio was 36.59 - it isn't short-term cheap, but I think it will prove to be long-term cheap.Some investors don’t like buying high PE stocks and they cite studies that show that low PE stocks outperform high PE stocks across all asset classes. I believe those studies are flawed due to the samples used. If we use all high PE stocks and all low PE stocks those studies are probably correct. But those, like me, that study long-term growth companies will be able with a high degree of accuracy choose between best of the best and the weaker growth stories. We can identify with a higher degree of accuracy sustainable and enduring growth stories and vastly outperform a selection of well selected low PE stocks, in my opinion. I have owned ULTA since September of 2011. The price was $70.33 and the PE ratio was whopping 48.13. Today the PE on my original investment is 29.3, just barely on the right side of 30 even though the price is 42.6% higher. So, though I only owned the shares a bit less than a year, the PE has shrunk on my original investment so my margin of safety is increasing. My principal is much safer than when I first purchased it. I believe five years from now my margin of safety on my original purchase will be so high, even a recession won’t touch my principal and also leave some nice gains untouched. I consider ULTA a super stock in my portfolio and I believe it will be relevant for a very long time.The CEO leaving in my opinion isn't a significant reason for the price to crash. The holiday preview report was excellent. Sales rose 23.2% which was higher than it rose last year when it increased 21%. Holiday same store sales were up 7.4%. they reconfirmed 4Q guidance of $0.96 to $0.98. Last year, they made $0.73.Yes, there are risks, but I don’t think the business risk is that great. They could expand too fast, pick up debt and that would be bad, but so far they haven’t done that even though, they have expanded their store base rapidly. Presently, they have $191.7 million in cash and zero debt. We can easily see if they start to expand too quickly and endangering their balance sheet. So far this hasn’t been a problem.But there is quotational risk, or the risk the price could go down because the markets go down or investors flee high PE stocks for a while. This does happen from time to time particularly if a recession looms or there is fear that the economy is weakening. If this happens, I am sure I will buy more. Some investors would rather wait to buy them when the PE is less than 30 or less than 25 or less than 20. I watched investors wait on what was to become huge winners waiting for a price that Wall Street calls cheap. Warren Buffett warns if you wait for the robins to sing the spring will be over. I have seen my share of growth stocks trade regularly at low PE ratios after decades of growth and after they matured. If you wait for the robin to sing, spring could be long gone. I believe ULTA is a good long-term opportunity. Yes, the price could come down, if so great, we buy more at a better value point. The Great recession hasn’t been too far gone. We are unlikely to get Great recession value points today without another recession. I don’t wait for recessions to invest, I ease into my companies at better and better value points which I believe will ensure my future regardless of what happens to the economy, barring a Mad Max scenario.Another example: Investors could have purchased BWLD in the second and third quarters of 2005 at a price lower than the lowest price reached during the Great Recession that was about to occur just three years later. So when I identify a company that I believe have strong long-term growth prospects I don’t wait. I buy – I might buy smaller, but I buy some and then look to get more at better and better value points over time.Why do I believe ULTA has a long-term future? Because I think they have a chance to create another very successful category killer for cosmetics and services. The services part is a significant component of their growth strategy and what will set them apart from Amazon and eventually build customer loyalty and product buying power. Hoovers reports that there are about 65000 beauty shops in the U.S. ULTA will expand their smaller format store base in time to place them in markets they aren’t in now. That 1200 store U.S target may get raised over time if they are successful in expanding the service part of their business. I believe ULTA is a category killer in the making. Sephora is a good competitor, but their stores are less than half the size of an average UlTA store and cannot offer the number of products or services that ULTA can offer. ULTA offers over 20,000 SKUs and is building a concept that will become very hard to duplicate in my opinion. They have the first mover advantage. ULTA only has about 2% of the beauty industry market.They carry a number of products that are exclusive to their stores. A big part of their growth strategy is to pick up early on new beauty product trends and bring them to their stores, sometimes in exclusive deals. Investors may drop the ball if they think of ULTA as simply a cosmetic store.
2014 EPSe is 3.41. $85 represents 25x of that.
Historically speaking, for ULTA, forth quarter tends to be the most profitable quarter of the year.https://eresearch.fidelity.com/eresearch/evaluate/fundamentals/earnings.jhtml?symbols=ULTARecent pullback in share price seems like an excellent opportunity to buy if one expects for this company to continue its steady growth trajectory. Remarkably, ULTA has no debt to speak of.... "For the fourth quarter, Ulta expects earnings per share between 96–98 cents, significantly higher than 73 cents in the year-earlier quarter. Net sales are estimated in the range of $742–$754 million based on comparable store sales growth of 5% to 7%. For fiscal 2012, the company projects earnings per share in the range of $2.64–$2.66." ... source:http://www.zacks.com/stock/news/89937/ultas-holiday-season-sales-soarHere are some "Key Statistics" compared to other "specialty retailers" (an imprecise aggregate comparison) :https://eresearch.fidelity.com/eresearch/evaluate/fundamentals/keyStatistics.jhtml?stockspage=keyStatistics&symbols=ULTAIf one wants to compare (with better precision) to another, specific, stock of choice or up to four more ticker symbols simultaneously, Fidelity has a great (free) tool for that as well:https://research2.fidelity.com/fidelity/screeners/commonstock/comparison.asp?symbols=ULTAOne can compare on any one choice of metrics:Key StatisticsDividendsValuationPerformance & VolatilityGrowthProfitabilityCash & DebtOwnership & Trading CharacteristicsIntraday Price & Volumehttps://research2.fidelity.com/fidelity/screeners/commonstock/comparison.asp?symbols=ULTA(look at right portion of the linked site > drop down menu titled: "Key Statistics" - That is where one can change the metrics of comparison)
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