Ulta Beauty (ULTA) Increases Yet Falls Behind Market: What Investors Need to Know

Ulta Beauty (ULTA) ended the recent trading session at $543.86, demonstrating a +1.77% change from the preceding day's closing price. The stock lagged the S&P 500's daily gain of 1.79%. Elsewhere, the Dow saw an upswing of 1.71%, while the tech-heavy Nasdaq appreciated by 2.59%.

The beauty products retailer's stock has climbed by 18.1% in the past month, exceeding the Retail-Wholesale sector's gain of 8.07% and the S&P 500's gain of 1.72%.

The upcoming earnings release of Ulta Beauty will be of great interest to investors. The company is forecasted to report an EPS of $6.16, showcasing a 6.57% upward movement from the corresponding quarter of the prior year. Our most recent consensus estimate is calling for quarterly revenue of $2.97 billion, up 6.4% from the year-ago period.

For the full year, the Zacks Consensus Estimates are projecting earnings of $28.77 per share and revenue of $13.21 billion, which would represent changes of +12.21% and +10.27%, respectively, from the prior year.

Investors should also pay attention to any latest changes in analyst estimates for Ulta Beauty. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.01% higher. Ulta Beauty is currently a Zacks Rank #3 (Hold).

Investors should also note Ulta Beauty's current valuation metrics, including its Forward P/E ratio of 18.58. For comparison, its industry has an average Forward P/E of 15.83, which means Ulta Beauty is trading at a premium to the group.

Also, we should mention that ULTA has a PEG ratio of 1.67. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Retail - Miscellaneous industry had an average PEG ratio of 1.75 as trading concluded yesterday.

The Retail - Miscellaneous industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 155, putting it in the bottom 37% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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