Group 1 - The analyst has extensive experience in investment banking, focusing on both public and private market opportunities, and has a strong background in consumer stocks [1] - The analyst emphasizes the importance of competitive advantages and growth prospects in investment decisions, influenced by notable figures like Ben Graham and Warren Buffett [1] - The analyst prefers a long-only investment strategy, finding shorting stocks to be challenging and less reliable [1] Group 2 - The analyst holds both CFA and CAIA charters, indicating a high level of professional qualification in investment analysis [1] - The analyst has experience using research tools such as Bloomberg and Factset, enhancing their ability to conduct thorough market analysis [1] - The analyst's approach includes using discounted cash flow (DCF) models as a supportive tool rather than the sole basis for investment recommendations [1]

Core Viewpoint - The beauty sector is experiencing significant declines in 2025, with Ulta Beauty, Coty, and e.l.f. Beauty all facing steep losses, but Ulta Beauty is positioned for a potential rebound due to its diverse product lineup and strong customer loyalty [12][13]. Ulta Beauty - Ulta Beauty ended 2024 down 11.24% and is currently down 16.05% year-to-date (YTD) [1] - The company reported fiscal Q3 2025 earnings per share (EPS) of $5.14, beating consensus estimates by $0.61, with revenues rising 1.7% year-over-year (YoY) to $2.53 billion [4] - Ulta Beauty issued an upside guidance for fiscal 2025 with EPS expected between $23.20 to $23.75, up from previous forecasts, and revenues projected between $11.1 billion to $11.2 billion [5] - The compound annual growth rate (CAGR) for Ulta Beauty has been 17% since 2010, with skincare being the strongest growth driver at a CAGR of 19.3% [3] Coty - Coty closed 2024 with a 43.96% loss and is down 19.83% YTD [1] - The company reported fiscal Q2 2025 EPS of $0.11, missing consensus estimates by $0.10, with revenues falling 3.3% YoY to $1.67 billion [7] - Coty faced challenges in China and other markets, impacting its sales of color cosmetics, although its Prestige Fragrances portfolio continued to perform well [6][8] e.l.f. Beauty - e.l.f. Beauty has seen a significant decline, with a 41.86% drop YTD as of February 14, 2025, and finished 2024 down 13.02% [1][2] - The company reported fiscal Q3 2025 EPS of $0.74, missing estimates by $0.02, but revenues surged 31.2% YoY to $355.3 million [11] - e.l.f. Beauty lowered its guidance for fiscal 2025 EPS to a range of $3.27 to $3.32, down from earlier estimates, with expected revenues between $1.300 billion to $1.310 billion [12]

Core Insights - The article discusses the investment position of Parkev Tatevosian, CFA, and his affiliation with The Motley Fool, highlighting the potential for compensation through promotions [1] Company Insights - The Motley Fool has positions in and recommends Ulta Beauty, indicating a positive outlook on the company's stock [1]

Company Performance - Ulta Beauty (ULTA) closed at $412.15, reflecting a -1.52% change from the previous session, underperforming the S&P 500's daily loss of 0.51% [1] - Over the past month, Ulta Beauty shares have decreased by 2.48%, lagging behind the Retail-Wholesale sector's gain of 7.41% and the S&P 500's gain of 2.87% [1] Upcoming Earnings - The upcoming earnings release is expected to show an EPS of $7.12, which represents an 11.88% decline compared to the same quarter last year [2] - Revenue is anticipated to be $3.46 billion, indicating a 2.6% decrease from the same quarter of the previous year [2] Full Year Projections - For the full year, earnings are projected at $23.99 per share, reflecting a -7.84% change from the prior year, while revenue is expected to be $11.27 billion, showing a +0.56% change [3] Analyst Forecasts - Recent revisions to analyst forecasts for Ulta Beauty are important, as upward revisions indicate analysts' positive outlook on the company's business operations and profit generation capabilities [4] Zacks Rank and Valuation - The Zacks Rank system currently rates Ulta Beauty at 2 (Buy), with a historical average annual gain of +25% for 1 rated stocks since 1988 [6] - Ulta Beauty has a Forward P/E ratio of 17.44, which is a premium compared to its industry's Forward P/E of 15.21 [6] PEG Ratio and Industry Ranking - The company has a PEG ratio of 1, compared to the Retail - Miscellaneous industry's average PEG ratio of 1.42 [7] - The Retail - Miscellaneous industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 15, placing it in the top 6% of over 250 industries [7][8]

Core Insights - Ulta Beauty, Inc. is the largest specialty beauty retailer in the United States, offering a range of products including fragrances, skincare, hair care, and salon services [1] - The company has recently appointed a new CEO, indicating potential strategic changes that may impact its future performance [1] - The focus on value investing highlights the importance of identifying companies with long-term growth potential, particularly those undergoing strategic changes that can correct stock mispricing [1] Company Strategy - The investment approach emphasizes analyzing company strategies and competitive advantages to assess future prospects [1] - Companies undergoing strategic changes are viewed as presenting the highest return potential due to existing misconceptions and uncertainties surrounding their stock [1] Market Position - Ulta Beauty's position as a leading retailer in the beauty sector suggests a strong competitive advantage, which may be leveraged under new leadership [1]

Core Insights - Milk Makeup, a clean beauty brand, is expanding its presence by partnering with Ulta Beauty, making its products available in over 600 stores and online starting this spring [1][4] - The brand has seen significant growth, becoming a top 20 EMV makeup brand globally with a 75% increase in EMV last year [2] - Milk Makeup's product range includes over 150 items priced between $20 and $52, emphasizing inclusivity and innovative formulations [3][4] Company Overview - Milk Makeup was founded in New York City and is known for its commitment to clean, vegan, and cruelty-free products, focusing on creativity and self-expression [5][6] - The brand aims to unlock creativity for all individuals, emphasizing that beauty is about personal expression rather than just makeup application [6] Industry Context - The partnership with Ulta Beauty aligns with the growing consumer preference for brands that prioritize values such as inclusivity and community [3] - Ulta Beauty's Senior Vice President highlighted Milk Makeup's innovative approach and its role in enhancing the beauty discovery experience for consumers [4] Strategic Vision - Waldencast plc, the parent company of Milk Makeup, aims to build a leading beauty and wellness platform by developing and scaling purpose-driven brands [7][8] - The operational scale and expertise provided by Waldencast are expected to enhance Milk Makeup's market responsiveness and growth potential [8]

Core Points - A California mother, Michelle Mack, pleaded guilty to running an organized retail crime ring that stole millions in beauty products from retailers like Ulta Beauty and Sephora to resell on Amazon [1][9] - Mack has been sentenced to five years in prison and ordered to pay $3 million in restitution to the affected retailers [2][11] - The crime ring reportedly led to an estimated $8 million in stolen beauty products, spanning at least a dozen states [9][10] Retail Impact - The restitution amount of $3 million is relatively small compared to the annual net income of retailers like Ulta, but it still represents a financial recovery for the companies involved [5] - Ulta Beauty expressed pride in collaborating with law enforcement on the investigation, highlighting the importance of partnerships in combating organized retail crime [6] - The National Retail Federation noted that restitution amounts for theft have only recently started reaching millions, indicating a growing trend in organized retail crime [7] Crime Dynamics - Mack's operation involved recruiting young women to steal products, which were then sold at a fraction of their retail price on her Amazon storefront [10] - The investigation revealed the sophisticated nature of retail crime rings and their use of online marketplaces to sell stolen goods [10] - The judicial process for restitution is complex, and it does not guarantee that victims will receive full compensation for their losses [9][8]

Core Viewpoint - Ulta Beauty is positioned as a strong investment opportunity due to its resilient business model, significant market presence, and attractive valuation metrics, suggesting potential for market-beating returns [1][6][10]. Company Overview - Ulta Beauty operates 1,437 stores in the U.S. as of the end of fiscal Q3 2024, offering a wide range of beauty brands both in-store and online, including partnerships with retailers like Target [2]. - The company combines physical retail with digital offerings, providing services such as full-service hair salons that enhance customer experience [3]. Customer Engagement - A substantial portion of Ulta Beauty's sales is driven by its loyalty program, which has over 44 million members and grew by 5% year-over-year in Q3 [4][3]. - The loyalty program contributes to the company's resilient market share, as it fosters repeat purchases and customer retention [4]. Digital Growth and Revenue Streams - Ulta Beauty is expanding its digital channels, similar to Walmart, by leveraging retail media to market products and generate advertising revenue [5]. - The company anticipates net sales exceeding $11 billion for 2024, with a stable operating margin projected at around 13% [6][7]. Profitability and Shareholder Returns - With expected annual sales of $11 billion and a 13% operating margin, Ulta Beauty could generate over $1.4 billion in annual operating income [8]. - The company has no long-term debt and minimal capital expenditures, allowing for a significant portion of profits to be returned to shareholders through stock buybacks, which have reduced the outstanding share count by nearly 18% over the past five years [9]. Valuation Metrics - Ulta Beauty's current price-to-earnings (P/E) ratio is 16, which is over 40% cheaper than the S&P 500 average of about 29, indicating it may be undervalued [10]. - The potential for stock price appreciation exists, but even if it remains a value stock, the company can enhance shareholder value through aggressive buybacks [11][12]. Future Outlook - The company is expected to achieve a 10% annual return under a scenario of zero growth, with potential for higher returns if growth is realized, particularly through its retail media network [13].

Company Overview - Ulta Beauty, Inc. (ULTA) is currently positioned as an intriguing investment choice due to solid earnings estimate revisions and a favorable Zacks Industry Rank [1][5] - The company has seen a rise in earnings estimates, indicating a more bullish outlook from analysts for both short and long-term prospects [3][4] Industry Analysis - The Retail - Miscellaneous industry, where Ulta operates, has a Zacks Industry Rank of 34 out of over 250 industries, suggesting it is well-positioned compared to other segments [2] - A rising trend in this industry can positively impact multiple securities, indicating a broad uplift in the sector [2] Earnings Estimates - Current quarter earnings estimates for Ulta have increased from $6.69 per share to $7.06 per share over the past month [4] - Current year earnings estimates have also risen from $23.59 per share to $23.94 per share, reinforcing the company's strong position [4]

Group 1 - Ulta Beauty's stock appreciated by 57.6% over the past five years, increasing from approximately $267 to over $415 per share, turning a $5,000 investment into $7,878 [1] - In comparison, the S&P 500 index returned 95.5% during the same period, with a $5,000 investment growing to $9,776, highlighting the relative underperformance of Ulta Beauty [2] - The company's same-store sales increased by only 0.6% in the fiscal third quarter ending November 2, 2024, indicating sluggish sales growth amid changing consumer spending habits [3] Group 2 - Ulta Beauty's stock currently trades at a price-to-earnings (P/E) ratio of 17, down from about 20 a year ago, which is significantly lower than the S&P 500's P/E ratio of 30 [4] - The decline in stock price is attributed to cyclical concerns, but long-term investors may find satisfaction in the returns generated over a five-year horizon [4]