Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), Macy’s, Inc. (M), Elizabeth Arden, Inc. (RDEN): Hold on to This Winner, It’s Still a Good Investment

Page 1 of 2

Beauty retailer Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), has gone from being ugly to pretty in the space of just six months. The stock was trading close to its 52-week low in March this year after Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)’s outlook disappointed analysts, but it hit a new 52-week high last Friday after second-quarter results beat estimates.

 Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)

Shares spiked more than 16% after Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)’s earnings of $0.70 per share came in ahead of the $0.67 consensus estimate. The company’s revenue of $601 million was comprehensively ahead of the $588 million expectation. What’s more, the year-over-year readings were also fantastic. Revenue was up 25% from the year-ago quarter while net income jumped 28.3% to $44.9 million.

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)’s earnings guidance of $0.71-$0.74 per share for the current quarter — below the expectation of $0.76 per share — didn’t dampen investors’ spirits either. With the company reiterating its full-year guidance, there wasn’t much reason to panic.

But with shares trading at an expensive 42 times earnings now, should investors continue holding Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)? Given the company’s impressive growth rate so far, and also the fact that analysts are expecting earnings to grow at an annual rate of 23% for the next five years, a rich valuation might be justified.

Some pretty strategies
Ulta Salon has executed well on its strategies so far — leading to tremendous growth — and new CEO Mary Dillon is keen on building on the company’s solid foundation further. Management will continue to focus on expanding the store network, merchandise additions, the e-commerce business, etc.

Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) presently has 609 stores and it plans to open another 66 in the two remaining quarters of the fiscal year. More importantly, the company has been aggressively remodeling its existing stores and only 38 stores will run on the old format by the end of the year. In addition, new store productivity has also been robust as Ulta focuses on the quality of its locations along with marketing initiatives.

Management has already approved 90 store sites for fiscal 2014 as it works toward its long-term goal of growing square footage at a rate of 15% to 20%. But to complement store growth, a strong product assortment is also necessary, and that’s why the company keeps adding new products and services to its portfolio.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!