ULTA Beauty.
$ULTA (+1,48 %)

Currently, apparently, as cheap to get as the last time in fall 23, in the Corona Crash and sometime in 2018 (yet rare and short-lived).

The company is debt-free (bank debt) and operates over 1300 beauty stores, some of them directly in Target $TGT (+3,31 %) stores.

Currently the outlook looks uncertain, is growth leveling off?

Will the competition (mainly Sephora, owned by LVMH $MC (+1,23 %) ) snatch further market share in the higher-priced segment?

These are questions I've been asking myself for a few days and haven't found an answer to yet, so let's discuss them as a community in the comments.

I like the company policy, you have an experienced CEO who has been with the company for about 10 years and has grown up. ULTA has bought back an average of 2% of shares per year over the last 10 years and has been able to increase both the operating margin and same store sales substantially, both of which are above the average of normal retailers.

Retailers, a good point.

Retailers, as I have learned, you want to buy as cheaply as possible due to price pressure & competition, so if I apply a 10 P/E ratio to ULTA, for example, the company would still have around $4-4.5 billion in value downside or -25-30% in value loss per share. At the moment we are hovering between 15 & 16, historically 20 was a good median for this company.

According to the stock finder, the company is also cheaply valued, with a price/cash flow ratio of around 13 and an average of 17.94 over the last 10 years.

According to the fair value cash flow, we currently have almost a 20% undervaluation for ULTA Beauty, just like in October 2023.

The question is whether the growth will level off significantly and lead to a revaluation or whether Ulta might even manage to create ~300 new stores in the next 10 years (Canada/Mexico) which would continue to be a driving factor.

In the course of my research, I made comparisons with AutoZone $AZO (+1,38 %) to see how a company with small sales growth and saturated locations can continue to grow strongly. Here, however, I came to the realization that the economic factor may have played a decisive role.

Phew, so actually I just wanted to ask "what do you think of Ulta Beauty?" 😂

GERIT 🐅

©️ Picture is mine.