Ulta Beauty, Inc. (NASDAQ:ULTA) has been taking a beating after its recent earnings report didn’t meet analysts’ expectations and since the company lowered forward guidance. Investors are selling and the stock is near its 52-week low.
Many investors might be scared away from Ulta because of the media’s negative news. But as a value investor I try to focus more on the facts of the company and the real value,
This article will show you that when you dig deeper into the fundamentals, you will see that Ulta has been near picture-perfect with consistent and increasing fundamentals. I see this recent share price drop more as an exaggerated market reaction since Ulta didn’t meet or exceed the analysts’ expected path of perfection. Because of Ulta’s pristine track record, analysts have probably priced in perfection and when the latest quarter of still positive growth fell short, the stock got punished big time.
Company Snapshot
Ulta is the country's largest beauty retailer. It sells over 20,000 products, 500+ brands, and has over 1,200 retail stores in the U.S.
They also offer hair and skin services in-store, which helps to distinguish them from other beauty retailers. The CEO, Mary Dillion is focused on Ulta Beauty being an all-in-one place to buy beauty products/services. This provides more convenience and choices for customers and could help to persuade shoppers to choose their store over the competition.
Some will say that brick-and-mortar retail is dying, but beauty stores could be an exception. Customers like to see, feel, smell, and sense the products. They also can sample cosmetics and are driven to the stores for the additional beauty services. So while Ulta does have a growing online presence, it shouldn't have to worry as much as some other retailers about physical store sale declines.
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