Why Shares of Ulta Salon, Cosmetics, & Fragrance Inc. Got Freshened Up

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ulta Salon, Cosmetics & Fragrance  (NASDAQ: ULTA  ) were looking rejuvenated today, gaining as much as 16% and finishing up 14% after turning in a strong first-quarter earnings report.

So what: The beauty-products and salon chain beat estimates across the board, and delivered robust growth in all three key revenue streams: organic same-store sales, e-commerce, and new stores. Earnings per share improved from $0.65 to $0.77, beating estimates of $0.74 as revenue jumped 22% to $713.8 million, topping expectations of $700 million. Same-store sales improved briskly, up 8.7% in the quarter, which includes a 72% jump in online revenue.  

Now what: Profit growth was slower than top-line growth as the company works on converting members of its loyalty program to ULTAmate rewards program, which forced gross margin lower by 50 basis points to 34.5%. For the current quarter, management expects earnings per share of $0.78-$0.83 against the Wall Street view of $0.82, but its revenue forecast of $706 million to $717 million was ahead of the consensus at $704 million. UIta shares are priced for growth, and the company has disappointed the market before with its financial results, but during a quarter where many retailers struggled, it bested expectations and appears to be firing on all cylinders, with an aggressive store expansion ensuring continued growth. With shares still trading at a relative discount, now may be a good time to get in.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2991378, ~/Articles/ArticleHandler.aspx, 7/31/2014 8:27:38 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement