ULTA SALON NDQ-ULTA
TIMELINESS
SAFETY
TECHNICAL
1
3
2
RECENT
PRICE
High:
Low:
Raised 7/10/15
37.7 RELATIVE
DIV’D
Median: NMF) P/E RATIO 2.06 YLD
175.31 P/ERATIO 33.8(Trailing:
35.6
15.6
17.1
5.6
19.3
4.1
37.2
17.0
75.7
33.7
103.5
63.4
132.7
72.5
134.5
80.4
Nil
188.5
120.4
Target Price Range
2018 2019 2020
LEGENDS
18.0 x ″Cash Flow″ p sh
. . . . Relative Price Strength
Options: Yes
Shaded area indicates recession
Raised 2/3/12
Raised 1/15/16
BETA .95 (1.00 = Market)
VALUE
LINE
320
200
160
120
100
80
60
2018-20 PROJECTIONS
Ann’l Total
Price
Gain
Return
High 280 (+60%) 12%
Low 185
(+5%)
2%
Insider Decisions
to Buy
Options
to Sell
M
0
2
3
A
0
0
0
M
0
0
0
J
0
0
0
J
0
0
0
A
0
0
0
S
0
2
1
O
0
0
0
N
0
0
0
40
% TOT. RETURN 12/15
Institutional Decisions
1Q2015
219
to Buy
to Sell
158
Hld’s(000) 57105
2Q2015
201
171
56330
3Q2015
214
200
58246
Percent
shares
traded
45
30
15
1 yr.
3 yr.
5 yr.
Ulta Salon, Cosmetics & Fragrance, Inc. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
was founded in 1990 as a discount beauty
-- - 16.03 18.79 21.02 24.17 28.55 34.69 41.58 50.50 61.75 71.45
retailer, eventually embarking on a multi--d.50
1.33
1.75
2.26
3.15
4.07
4.81
6.06
7.40
8.40
year expansion and transformation stategy.
--.48
.43
.66
1.16
1.90
2.68
3.15
3.98
4.83
5.70
The company went public in October, 2007,
----------Nil
Nil
issuing 7.7 million shares at an initial price
--3.72
4.24
5.03
6.69
9.40 12.29 15.62 19.44 22.60 27.00
of $18 per share. At the time, the company
-- - 56.91 57.74 58.17 60.20 62.21 64.01 64.23 64.18 63.50 63.00
also converted 41.5 million preferred shares
--51.6
27.0
18.6
22.8
31.4
34.3
31.7
26.1 Bold figures are
Value Line
into common stock. The lead underwriters
--2.74
1.62
1.24
1.45
1.97
2.18
1.78
1.36
estimates
for the deal were J.P. Morgan and
-----------Wachovia Securities.
- - 755.1 912.1 1084.6 1222.8 1454.8 1776.2 2220.3 2670.6 3241.4
3920
4500
CAPITAL STRUCTURE as of 10/31/15
Total Debt None
Leases, Uncapitalized: Annual rentals $159.2
mill.
No Defined Benefit Pension Plan
Common Stock 63,669,389 shs.
as of 11/25/15
MARKET CAP: $11.2 billion (Large Cap)
CURRENT POSITION 2013
2014 10/31/15
($MILL.)
Cash Assets
419.5
539.4
359.8
Receivables
47.0
52.4
50.9
Inventory (FIFO)
457.9
581.2
884.4
Other
78.3
87.4
93.1
Current Assets
1002.7 1260.4 1388.2
Accts Payable
148.3
190.8
291.3
Debt Due
---Other
118.5
168.8
166.7
Current Liab.
266.8
359.6
458.0
ANNUAL RATES Past
of change (per sh) 10 Yrs.
Sales
-‘‘Cash Flow’’
-Earnings
-Dividends
-Book Value
-Fiscal
Year
Begins
2012
2013
2014
2015
2016
Fiscal
Year
Begins
2012
2013
2014
2015
2016
Calendar
2012
2013
2014
2015
2016
Past Est’d ’11-’13
5 Yrs.
to ’18-’20
15.0% 18.0%
57.5% 17.0%
41.5% 19.0%
-Nil
25.5% 18.0%
QUARTERLY SALES ($ mill.) A
Apr.Per Jul.Per Oct.Per Jan.Per
474.1 481.7 505.7 758.8
582.7 601.0 618.8 868.1
713.9 734.2 745.7 1047.6
868.1 877.0 910.7 1264.2
1000 1025 1050 1425
EARNINGS PER SHARE AB
Apr.Per Jul.Per Oct.Per Jan.Per
.54
.54
.59
1.00
.65
.70
.70
1.09
.77
.94
.91
1.33
1.04
1.15
1.11
1.53
1.25
1.30
1.30
1.85
QUARTERLY DIVIDENDS PAID
Mar.31 Jun.30 Sep.30 Dec.31
NO CASH DIVIDENDS
BEING PAID
Full
Fiscal
Year
2220.3
2670.6
3241.4
3920
4500
Full
Fiscal
Year
2.68
3.15
3.98
4.83
5.70
Full
Year
--------------
35.1%
9.2%
196
22.5
38.7%
3.0%
88.2
50.7
153.6
11.8%
14.7%
---
35.4%
9.5%
249
25.3
39.9%
2.8%
117.0
74.8
211.5
9.8%
12.0%
NMF
NMF
35.0%
9.0%
311
25.3
40.3%
2.3%
159.7
88.0
245.0
8.2%
10.3%
10.3%
--
35.6%
10.7%
346
39.4
40.3%
3.2%
136.4
-292.6
13.8%
13.5%
13.5%
--
37.7%
12.6%
389
71.0
39.9%
4.9%
241.0
-402.5
17.6%
17.6%
17.6%
--
39.0%
15.3%
449
120.3
38.5%
6.8%
415.3
-584.7
20.6%
20.6%
20.6%
--
39.3%
16.6%
550
172.5
38.3%
7.8%
568.2
-786.9
21.9%
21.9%
21.9%
--
39.2% 39.1%
16.2% 16.7%
675
774
202.8 257.1
38.1% 37.5%
7.6%
7.9%
735.9 900.8
--1003.1 1247.5
20.2% 20.6%
20.2% 20.6%
20.2% 20.6%
---
40.0%
17.0%
875
310
37.0%
7.9%
935
Nil
1435
21.5%
21.5%
21.5%
Nil
40.0%
17.0%
975
360
37.5%
8.0%
1075
Nil
1700
21.0%
21.0%
21.0%
Nil
THIS
STOCK
VL ARITH.*
INDEX
44.7
88.3
444.1
-6.9
37.7
52.1
© VALUE LINE PUB. LLC
18
18-20
Sales per sh A
‘‘Cash Flow’’per sh
Earnings per sh B
Div’ds Decl’d per sh D
Book Value per sh
Common Shs Outst’g C
Avg Ann’l P/E Ratio
Relative P/E Ratio
Avg Ann’l Div’d Yield
110.00
12.75
9.25
Nil
41.65
60.00
25.0
1.55
Nil
Sales ($mill) A
Gross Margin
Operating Margin
Number of Stores
Net Profit ($mill)
Income Tax Rate
Net Profit Margin
Working Cap’l ($mill)
Long-Term Debt ($mill)
Shr. Equity ($mill)
Return on Total Cap’l
Return on Shr. Equity
Retained to Com Eq
All Div’ds to Net Prof
6600
40.0%
17.0%
1200
565
39.0%
8.6%
1500
Nil
2500
22.5%
22.5%
22.5%
Nil
BUSINESS: Ulta Salon, Cosmetics & Fragrance, Inc. operates
specialty retail stores selling cosmetics, fragrance, haircare, and
skincare products, and related accessories and services. It offers a
broad assortment of over 20,000 prestige and mass beauty products. The company has approximately 774 stores in 47 states, primarily located in off-mall locations, with an average store size of
10,000 square feet, including 950 square feet dedicated to fullservice salons. Has about 8,100 employees. Officers & directors
own 6.6% of common stock; Sands Capital Mgmt., 11.4%; Lone
Pine Capital, 7.5% (5/14 Proxy). CEO : Mary Dillon. Incorporated:
Delaware. Address: 1000 Remington Blvd., Suite 120, Bolingbrook,
IL 60440. Telephone: 630-410-4800. Internet: www.ulta.com.
Ulta continues to outperform expectations. The company reported better-thananticipated third-quarter (fiscal 2015
ended January 30, 2016) results, posting
earnings of $1.11 a share, 22% ahead of
the year-earlier figure and a nickel higher
than our estimate. Sales also rose 22%,
three percentage points higher than we
were looking for. The top-line momentum
was driven by a 9.9% same-store advance
at retail locations and a 20.1% gain in
salon sales. Meanwhile, the e-commerce
business saw sales jump more than 50%.
We have raised our full-year top- and
bottom-line forecasts. Although the
above-mentioned performance played a
role, we were also swayed by management’s guidance increase. Specifically, it
now looks for 2015 sales and earnings
growth in the low 20s percentage vicinity,
up from its earlier expectation for highteens growth. In that vein, we’ve upped
our sales call by roughly $75 million, to
$3.92 billion, and our share-net assumption by nearly a dime, to $4.83.
Growth ought to remain healthy this
year. We look for the top line to pick up
some slack for slowing margin expansion.
Earlier growth initiatives should continue
to pay off, as evidenced by the company’s
recent success with its e-commerce business. Meanwhile, new store openings
should be a boon.
This stock continues to don our Highest rank (1) for Timeliness. Even
though ULTA has retreated from its apex
reached following the release of the most
recent financial results, it has held up far
better than the broader investment universe and is still trading at a higher price
than at the time of our October review. We
suspect that it will remain a market
leader for the coming six to 12 months,
based on the strong operating results that
we envision over that time frame. Wall
Street’s perceived flight to quality should
further support our thesis.
Those looking out to 2018-2020 ought
to exercise caution here, though.
ULTA stock is up handsomely since going
public nearly 10 years ago, thus discounting a healthy portion of the gains we
foresee to late decade. Plus, it continues to
trade at a steep price-to-earnings valuation.
Andre J. Costanza
January 29, 2016
(A) Fiscal year ends last Saturday in January report due mid-March.
of the following calendar year. Quarterly egs. (C) In millions.
may not add due to rounding.
(D) Paid $93.0 million special div. in 2007.
(B) Diluted earnings per share. Next earnings
© 2016 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
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Company’s Financial Strength
Stock’s Price Stability
Price Growth Persistence
Earnings Predictability
A
30
75
80
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