February 28, 2016
NASDAQ: ULTA
ULTA SALON COSMETCS & FRAG
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
NA
B-
C+
C
Annual Dividend Yield
NA
SELL
C-
D+
D
Beta
0.48
Sector: Consumer Goods & Svcs
ULTA BUSINESS DESCRIPTION
Ulta Salon, Cosmetics & Fragrance, Inc. operates
as a specialty retailer in the United States. The
company's stores provide cosmetics, fragrance,
haircare, skincare, bath and body products, and
salon styling tools.
Weekly Price: (US$)
D-
E+
E
E-
F
BUY
Market Capitalization
$10.5 Billion
52-Week Range
$120.38-$188.48
Sub-Industry: Specialty Stores
Source: S&P
SMA (50)
SMA (100)
RATING SINCE
TARGET PRICE
10/26/2010
$215.58
Price as of 2/25/2016
$164.25
1 Year
2 Years
220
TARGET
PRICE
$215.58
TARGET
TARGETPRICE
PRICE$215.58
$215.58
TARGET
PRICE
$215.58
200
180
160
STOCK PERFORMANCE (%)
3 Mo.
Price Change
-3.45
1 Yr.
18.36
3 Yr (Ann)
23.09
Last Qtr
22.12
20.20
21.97
12 Mo.
20.95
24.48
25.33
3 Yr CAGR
21.91
24.73
24.67
RETURN ON EQUITY (%)
ULTA
Q3 2015
21.79
Q3 2014
20.27
Q3 2013
21.18
Ind Avg
45.80
240.49
24.31
S&P 500
12.28
14.59
13.97
140
120
GROWTH (%)
Revenues
Net Income
EPS
100
80
Rating History
BUY
Volume in Millions
20
10
2014
2015
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate ULTA SALON COSMETCS & FRAG (ULTA) a BUY. This is driven by several positive factors, which we
believe should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
robust revenue growth, impressive record of earnings per share growth, compelling growth in net income,
good cash flow from operations and solid stock price performance. Although the company may harbor some
minor weaknesses, we feel they are unlikely to have a significant impact on results.
35.32
27.13
21.53
ULTA
Ind Avg
S&P 500
HIGHLIGHTS
The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior,
revenues rose by 22.1%. Growth in the company's revenue appears to have helped boost the earnings per
share.
EPS ANALYSIS¹ ($)
2013
2014
Q3 1.11
Q2 1.15
Q1 1.04
Q4 1.35
Q3 0.91
Q2 0.94
Q1 0.77
Q4 1.09
Q3 0.70
Q2 0.70
Q1 0.65
ULTA SALON COSMETCS & FRAG has improved earnings per share by 22.0% in the most recent quarter
compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per
share growth over the past two years. We feel that this trend should continue. During the past fiscal year,
ULTA SALON COSMETCS & FRAG increased its bottom line by earning $3.97 versus $3.14 in the prior year.
This year, the market expects an improvement in earnings ($4.83 versus $3.97).
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
The company, on the basis of net income growth from the same quarter one year ago, has significantly
outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net
income increased by 20.2% when compared to the same quarter one year prior, going from $59.12 million to
$71.07 million.
Net operating cash flow has significantly increased by 80.13% to $23.28 million when compared to the same
quarter last year. In addition, ULTA SALON COSMETCS & FRAG has also vastly surpassed the industry
average cash flow growth rate of -6.05%.
The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting
the earnings growth and other positive factors similar to those we have cited here. Looking ahead, the
stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to
the rest of its industry. We feel, however, that the other strengths this company displays justify these higher
price levels.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NASDAQ: ULTA
ULTA SALON COSMETCS & FRAG
Sector: Consumer Goods & Svcs Specialty Stores Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
PEER GROUP ANALYSIS
30%
SIG
AB
OR
ULTA
LE
Some of the larger specialty retail companies also profit from the extension of credit to their customers with
branded credit cards.
SBH MIK
Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if
stores open for more than one year are increasing top line revenue or shrinking.
22.5%
PEER GROUP: Specialty Retail
R
VO
FA
LE
AB
-15%
UN
TIF
SPLS
2.5%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $2.1 Billion and $11.4 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
30%
REVENUE GROWTH AND EARNINGS YIELD
SIG
V
FA
ULTA
AB
OR
FIVE
Ticker
ULTA
TIF
SIG
SPLS
MIK
SBH
DKS
CAB
ODP
FIVE
TSCO
Recent
Company Name
Price ($)
ULTA SALON COSMETCS & FR 164.25
TIFFANY & CO
65.12
SIGNET JEWELERS LTD
97.17
STAPLES INC
9.41
MICHAELS COS INC
22.72
SALLY BEAUTY HOLDINGS INC
31.48
DICKS SPORTING GOODS INC
42.82
CABELAS INC
47.39
OFFICE DEPOT INC
5.06
FIVE BELOW INC
38.72
TRACTOR SUPPLY CO
85.50
Market
Cap ($M)
10,463
8,349
7,728
6,056
4,748
4,602
3,857
3,214
2,778
2,112
11,435
Price/
Earnings
35.32
17.00
18.37
188.20
14.11
22.17
14.23
17.62
506.00
43.02
28.50
Net Sales
TTM ($M)
3,703.46
4,176.46
6,468.80
21,447.47
4,838.29
3,867.91
7,190.92
3,997.70
14,485.00
769.36
6,226.51
Net Income
TTM ($M)
299.45
496.88
424.00
32.65
335.25
222.42
356.94
189.33
8.00
48.99
410.40
The peer group comparison is based on Major Specialty Stores companies of comparable size.
LE
CAB
TSCO
DKS
MIK
SBH
TIF
UN
R
VO
FA
SPLS
ODP
LE
AB
-15%
Price as of 2/25/2016
$164.25
The variety of product focuses targeted by specialty retail companies is very diverse. These include but are
not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.
Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting
goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.
CAB
TSCO
DKS
Revenue Growth (TTM)
52-Week Range
$120.38-$188.48
V
FA
FIVE
Revenue Growth (TTM)
Market Capitalization
$10.5 Billion
INDUSTRY ANALYSIS
The specialty retail industry includes very well-known home improvement, apparel, automotive, and other
narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowe’s Companies (LOW), Gap (GPS),
Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), O’Reilly Automotive (ORLY), PetSmart
(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).
REVENUE GROWTH AND EBITDA MARGIN*
ODP
Beta
0.48
0%
8%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -10% and
28.2%. Companies with NA or NM values do not
appear.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NASDAQ: ULTA
ULTA SALON COSMETCS & FRAG
Sector: Consumer Goods & Svcs Specialty Stores Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
COMPANY DESCRIPTION
Ulta Salon, Cosmetics & Fragrance, Inc. operates as a
specialty retailer in the United States. The company's
stores provide cosmetics, fragrance, haircare, skincare,
bath and body products, and salon styling tools. It also
offers cosmetics, which includes products for the face,
eyes, cheeks, lips, and nails; haircare products, such as
shampoos, conditioners, styling products, and hair
accessories; and salon styling tools comprising hair
dryers, curling irons, and flat irons. In addition, the
company provides skincare, and bath and body products
consisting of products for face, hands, and body;
fragrances; nail polish and nailcare products; and men's
skincare, haircare, and fragrance products. Further, it
offers private label products consisting of Ulta branded
cosmetics, skincare, bath and body products, and
haircare products; and other health and beauty products.
As of August 1, 2015, it operated 817 stores in 48 states.
Its full-service salon in its stores offers haircuts, hair
coloring, and texturizing, as well as facials and waxing;
and offers its products through its Website, ulta.com.
Ulta Salon, Cosmetics & Fragrance, Inc. was founded in
1990 and is based in Bolingbrook, Illinois.
ULTA SALON COSMETCS & FRAG
1000 Remington Boulevard, Suite 120
Bolingbrook, IL 60440
USA
Phone: 630-410-4800
http://www.ulta.com
Beta
0.48
Market Capitalization
$10.5 Billion
52-Week Range
$120.38-$188.48
Price as of 2/25/2016
$164.25
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of ULTA shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
5.0
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, ULTA has a growth score better than 90% of
the stocks we rate.
strong
4.5
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 80% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
4.5
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 80% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
0.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. This company
pays no dividends.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NASDAQ: ULTA
ULTA SALON COSMETCS & FRAG
Sector: Consumer Goods & Svcs Specialty Stores Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
1.53
4.83 E
5.71 E
Q4 FY16
2016(E)
2017(E)
Market Capitalization
$10.5 Billion
52-Week Range
$120.38-$188.48
Price as of 2/25/2016
$164.25
FINANCIAL ANALYSIS
ULTA SALON COSMETCS & FRAG's gross profit margin for the third quarter of its fiscal year 2015 is
essentially unchanged when compared to the same period a year ago. The company managed to grow both
sales and net income at a faster pace than the average competitor in its industry this quarter as compared to
the same quarter a year ago. ULTA SALON COSMETCS & FRAG has weak liquidity. Currently, the Quick Ratio
is 0.90 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased
from the same period last year.
During the same period, stockholders' equity ("net worth") has increased by 15.83% from the same quarter last
year. Overall, the key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Beta
0.48
Q3 FY15
910.70
153.08
110.77
71.07
Q3 FY14
745.72
127.77
94.09
59.12
Q3 FY15
359.76
2,240.00
0.00
1,374.16
Q3 FY14
395.06
1,922.76
0.00
1,186.33
Q3 FY15
41.50%
16.80%
12.16%
1.65
13.36%
21.79%
Q3 FY14
42.30%
17.13%
12.62%
1.59
12.51%
20.27%
Q3 FY15
3.03
0.00
0.00
NA
Q3 FY14
3.33
0.00
0.00
NA
Q3 FY15
64
0.00
1.11
21.55
NA
1,215,434
Q3 FY14
64
0.00
0.91
18.42
NA
771,412
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NASDAQ: ULTA
ULTA SALON COSMETCS & FRAG
Sector: Consumer Goods & Svcs Specialty Stores Source: S&P
Annual Dividend Rate
NA
Annual Dividend Yield
NA
RATINGS HISTORY
Our rating for ULTA SALON COSMETCS & FRAG has
not changed since 10/26/2010. As of 2/25/2016, the
stock was trading at a price of $164.25 which is
12.9% below its 52-week high of $188.48 and 36.4%
above its 52-week low of $120.38.
2 Year Chart
Beta
0.48
Price/Earnings
1
2
3
premium
$150
$100
2014
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$88.79 No Change
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
(as of 2/25/2016)
1
2
3
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
4
5
ULTA 28.77
Peers 19.03
• Premium. A higher price-to-projected earnings ratio
than its peers can signify a more expensive stock
or higher future growth expectations.
• ULTA is trading at a significant premium to its
peers.
Price/Book
1
2
3
4
1
2
premium
1
Price/CashFlow
5
3
4
5
3
4
5
discount
ULTA 26.30
Peers 15.49
• Premium. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• ULTA is trading at a significant premium to its
peers.
Price to Earnings/Growth
1
2
3
premium
4
5
discount
ULTA 1.65
Peers 1.94
• Discount. The PEG ratio is the stock’s P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• ULTA trades at a discount to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
ULTA 25.33
Peers 16.94
• Higher. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• ULTA is expected to have an earnings growth rate
that significantly exceeds its peers.
Sales Growth
discount
ULTA 2.83
Peers 1.55
• Premium. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• ULTA is trading at a significant premium to its
industry.
2
premium
discount
ULTA 7.62
Peers 12.59
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• ULTA is trading at a significant discount to its
peers.
Price/Sales
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
5
discount
premium
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
Price as of 2/25/2016
$164.25
discount
premium
To
Buy
4
ULTA 35.32
Peers 27.13
• Premium. A higher P/E ratio than its peers can
signify a more expensive stock or higher growth
expectations.
• ULTA is trading at a significant premium to its
peers.
Price/Projected Earnings
From
Buy
52-Week Range
$120.38-$188.48
VALUATION
BUY. This stock's P/E ratio indicates a premium compared to an average of 27.13 for the Specialty Retail
industry and a significant premium compared to the S&P 500 average of 21.53. To use another comparison, its
price-to-book ratio of 7.62 indicates a significant premium versus the S&P 500 average of 2.56 and a
significant discount versus the industry average of 12.59. The price-to-sales ratio is well above both the S&P
500 average and the industry average, indicating a premium. The valuation analysis reveals that, ULTA SALON
COSMETCS & FRAG seems to be trading at a premium to investment alternatives within the industry.
$200
BUY: $88.79
Market Capitalization
$10.5 Billion
1
2
3
lower
4
5
higher
ULTA 20.95
Peers 5.35
• Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
• ULTA has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5