Investors reacted harshly to Ulta Beauty's (ULTA -0.40%) first-quarter update. Shares had been comfortably outpacing the market's rally through most of 2023 but are now in negative territory following that report. Wall Street wasn't thrilled to hear that competitive pricing pressures are likely to push operating profit a bit lower than originally expected this year.

That's not a thesis-busting issue for Ulta Beauty, though. And there are other factors that point to excellent returns for shareholders from here. Let's look at a few of the biggest reasons to like this growth stock following its recent pullback.

1. Winning market share

Ulta Beauty is still growing at a market-thumping rate, even though the selling environment has weakened in recent months. Comparable store sales were up 9.3% in Q1, on top of the prior-year period's 18.0% spike. There was no sign of a challenge around customer traffic, either. On the contrary, Ulta's 11.0% increase from transactions puts it in a league of its own among major national retailers and shows plenty of shopper loyalty.

The company continues to open new stores but at a conservative pace. That lift helped overall sales rise by more than 10% to $2.6 billion. "The year is off to a positive start as the Ulta Beauty team delivered revenue, operating margin, and diluted EPS consistent with our internal expectations," CEO Dave Kimbell told investors in late May. Executives also noted in a conference call with investors that the chain is winning market share in the expanding makeup industry today.

2. Still highly profitable

The big negative takeaway from the late May announcement was that Ulta Beauty has decided to follow competitors in cutting prices as industry growth returns to more normal patterns. "While we do not intend to lead promotional intensity," executives said, "we will respond as appropriate to protect and expand our share."

Ulta Beauty's double-digit traffic increase suggests it succeeded in keeping shoppers engaged in its stores, e-commerce platform, and Target shops. And the company remains highly profitable. Operating margin landed at 16.8% of sales, down from 18.7% of sales a year ago. Overall earnings improved to $6.99 per share from $6.30 per share last year.

3. Price check

The stock's valuation has become more attractive following the late May sell-off. You can own Ulta Beauty for around 2.2 times annual sales. Sure, its short-term growth prospects aren't quite as bright today. And revenue trends might slow further if a recession develops. But this retailer is still generating impressive profits and connecting with a growing customer base. Metrics like shopper traffic and profit margin support the bullish reading for the stock.

Continued success along these lines should help Ulta cross $11 billion in annual sales this year. But there are likely many more years of solid growth ahead for this high-performing retailer. Investors should consider the latest stock price pullback as a good opportunity to start adding Ulta stock to their portfolios.