A Quickie With Ulta Beauty

My Disclaimer
I could waste a lot of your time with graphs, charts, and other assorted worthless information all intended to show you that I know something about something when it comes to this company. But the truth is, I don’t know squat about this company. What I can tell you is that I am not a shareholder and, that I am a value investor with a focus on picks and shovels companies.

My intent with this post is to provide you with a brief overview of my various valuations for the company, all based on the company’s most recent 10-K filing, so you can determine if you have any investment interest.

Past and future gains contained in this post are based on actual and anticipated earnings, actual and anticipated dividends, and actual and anticipated price appreciation. Investors should always be aware that any investment has the potential for loss, and past performance is no guarantee of future results.

What They Do
Ulta Beauty is a beauty retailer that provides one-stop shopping for prestige, mass and salon products and salon services. The company focuses on providing affordable indulgence to customers by combining unmatched product breadth, value and convenience with the distinctive environment and experience of a specialty retailer. Industry peers include Regis Corporation, Macy’s, Inc., and Sephora Usa, Inc..

Short-Term Target
My current short-term target for the stock is $336.42, with an initial trailing stop set at $352.60. With a recent price of $357.97, upward price movement will find no resistance. Downward price movement will find support at $334.29 and again at $312.98, with final support found at $304.52.

Momentum Target
My momentum target for the stock is $175. Momentum targets are determined by overlaying a company’s most recent annual EPS, its year-over-year earnings growth, and the current yield of a 10-year treasury. Momentum investing often requires investors to trade in stocks that have already enjoyed significant gains while making no allowances for overall market corrections or the sustainability of a company’s earnings.

Growth Target
My growth target for the stock is $365. Growth targets are determined using a company’s year-over-year earnings growth, year-over-year PE growth, and year-over-year price growth.

Fair Value Investing
Fair value investing, more commonly known as value investing, requires investors to consider a company’s overall financial condition including past and future earnings growth, free cash flow, both book and tangible book values, net current asset value, and many other valuation metrics. For many fair value investors, the minimum required hold is five (5) years. My fair value estimate for the stock is $46.

Prior Average Valuations
My average valuation for the prior five year period of FY 2014 through FY 2018 is $74. Earnings during that time period averaged $5.60 per share and the average PE Ratio was 32. At this writing the current PE Ratio is 32.

Insider Transactions
The SEC classifies insiders as “management, officers or any beneficial owners with more than 10% class of a company’s security.” Insiders are required to abide by certain rules and fill out SEC forms every time they buy or sell company shares. In addition, to prevent insider trading, or benefiting illegally from material non-public information that their positions give them access to, the law prevents insiders from deposing of shares within six months of their purchase. This effectively bars insiders from profiting from quick trades based on their “insider” knowledge. In the past 12 months, the company has recorded 105 insider trades involving 1,168,328 shares of stock. Of those 105 insider trades, 45 were Buys involving 207,278 shares of stock, and 60 were Sells involving 960,350 shares of stock, creating an insider buy to sell ratio of 0.2 to 1.

Five Year Growth of $10K
If you had invested $10K in this stock five years ago (01/31/14), you would have received 116.67 shares of stock with a cost basis of $85.71 per share. Had you held the stock for five years and then closed your position (01/31/19), you would have closed at $291.92 per share. During that holding period you would have collected $0 in dividends, and your initial $10K investment would have returned to you $34,059 a gain of 241%.

Ulta Beauty, Inc. (Nasdaq: ULTA) – FYE 01/2019 – OVER VALUED – The stock is currently trading at levels above my most recent $246 terminate target. Please See Linked PDF Worksheet

There you are, short and to the point.

Wax
Posted on 04/28/19