ULTA
Ulta Beauty, Inc.$624.70
Sell
Target $550.04
Report: Mar 07, 2026Consumer Cyclical • Specialty Retail • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$624.70-12.0%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$550.04
(12% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$714.97
52 Week Low$323.37
Avg. 3 Month Volume659K
Efficiency
LTM Gross Margin39.1%
LTM EBITDA Margin17.6%
LTM EBIT Margin12.4%
LTM Operating Margin12.4%
LTM ROA17.3%
LTM ROE44.1%
LTM ROIC25.1%
LTM ROCE34.6%
Capital Structure
Market Cap (MM)$22.9B
Enterprise Value (MM)$24.6B
Shares Outstanding44.32M
Total Debt (MM)$2.18B
Cash & Equivalents (MM)$424.24M
LTM Net Debt (MM)$1.76B
LTM Net Debt/EBITDA0.8x
Growth
TTM Rev. Growth9.7%
Last 3-Yr Rev. CAGR6.7%
Last 3-Yr EBITDA CAGR0.1%
Last 3-Yr EPS CAGR2.1%
Valuation
Street Target Price$715.07
LTM EV/Revenue2.0x
LTM EV/Gross Profit5.1x
LTM EV/EBIT16.0x
LTM EV/EBITDA11.3x
LTM P/E19.8x
LTM EV/FCF23.1x
LTM P/FCF21.4x
LTM P/TB3.5x
LTM P/B8.2x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $624.7 versus fair value $550.04 (-12.0% expected return), and valuation confidence is stable. Debate: Bull case depends on Transaction Count Deceleration: A continued slide in transaction growth (currently 1.6%) would confirm that the loyalty moat is failing to drive new traffic, forcing a multiple de-rating. Bear case centers on Moat Erosion: Intensifying competition from Sephora's Kohl's expansion and Amazon's premium beauty segment permanently impairs Ulta's pricing power and return on capital. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The loyalty program's 46.7 million members provide a permanent data advantage and high switching costs. International expansion via Space NK and joint ventures offers a new, asset-light growth runway. Operational efficiencies from the SAP S/4HANA migration will drive margin recovery in FY2026.
Bear Case
U.S. beauty market saturation has led to a collapse in revenue growth from 10.5% to 0.8%. Negative incremental ROIC of -3.6% proves that new capital is being deployed into lower-return projects. Structural SG&A deleverage to 25.7% of sales is permanent due to labor inflation and competitive marketing requirements.
Key Catalysts
Near-Term (0-6 months)Impact: High
Transaction Count Deceleration: A continued slide in transaction growth (currently 1.6%) would confirm that the loyalty moat is failing to d...
Long-Term (18+ months)Impact: Critical
Target Partnership Conclusion: The potential end of the Target shop-in-shop agreement in late 2026 would remove a key royalty stream and cus...
Long-Term (18+ months)Impact: Moderate
Ulta is relevant for analysis now because it has just completed a major leadership transition and is entering the first full year of its 'Un...
Primary Risks
Concern: High
Moat Erosion: Intensifying competition from Sephora's Kohl's expansion and Amazon's premium beauty segment permanently impairs Ulta's pricin...
Concern: Medium
SG&A Deleverage: Continued labor inflation and the need for higher marketing spend to combat competition leads to permanent operating margin...
Concern: Medium
Stewardship is adequate for a mature retailer, but the lack of per-share compounding metrics in the incentive plan is a significant flaw. Th...
Recent Activity
2025-12-05SEC Filing (8-K)
+12.65%Ulta Beauty reports Q3 FY2025 results with 12.9% sales growth and 6.3% comparable sales increase
2025-08-29SEC Filing (8-K)
-7.14%Ulta Beauty reports Q2 FY2025 results with 9.3% sales growth and 6.7% comparable sales increase
2025-05-30SEC Filing (8-K)
+11.78%Ulta Beauty reports Q1 fiscal 2025 results with 4.5% net sales growth
2025-03-14SEC Filing (8-K)
+13.68%Ulta Beauty reports Q4 FY2024 results with 1.9% sales decline and 1.5% comparable sales growth
2024-12-06SEC Filing (8-K)
+8.99%Ulta Beauty reports Q3 fiscal 2024 results with 1.7% sales growth
Valuation Table
9.8/10Decision Grade
Scenario Range
$487
Bear
$627
Base
$728
Bull
$625