Ulta Beauty Inc (ULTA, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $376.37, Ulta Beauty Inc has witnessed a daily gain of 2.93%, marked against a three-month change of -10.05%. A thorough analysis, underlined by the GF Score, suggests that Ulta Beauty Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 8/10
- Momentum rank: 5/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability and growth rank, and a slightly lower momentum rank, GuruFocus assigned Ulta Beauty Inc the GF Score of 96 out of 100, which signals the highest outperformance potential.
Understanding Ulta Beauty Inc's Business
Ulta Beauty Inc, with a market cap of $17.05 billion and sales of $11.30 billion, is the largest specialized beauty retailer in the US. The company operates more than 1,400 freestanding stores and 600 Target shop-in-shops. Ulta Beauty Inc offers a wide range of products, including cosmetics, fragrances, skin care, and hair care products, along with salon services. These services account for about 4% of its revenue and drive traffic. Additionally, the company collects royalties through its Target partnership and credit card revenue. Most standalone Ulta stores are approximately 10,000 square feet and are located in suburban strip centers. The firm is expanding internationally, with plans to open franchised stores in Mexico and a joint venture to expand into the Middle East. Founded in 1990, Ulta Beauty Inc is based in Bolingbrook, Illinois.
Financial Strength Breakdown
According to the Financial Strength rating, Ulta Beauty Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 6.17, Ulta Beauty Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.17, Ulta Beauty Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Ulta Beauty Inc's impressive standing among its peers in generating profit. Ulta Beauty Inc's Operating Margin has increased (12.34%) over the past five years, as shown by the following data: 2021: 5.95; 2022: 15.14; 2023: 16.16; 2024: 15.05; 2025: 13.98. Furthermore, Ulta Beauty Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2021: 31.68; 2022: 39.03; 2023: 39.62; 2024: 39.09; 2025: 38.84. This trend underscores the company's growing proficiency in transforming revenue into profit. Ulta Beauty Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Ulta Beauty Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 14.8%, which outperforms better than 75.45% of 1,059 companies in the Retail - Cyclical industry. Moreover, Ulta Beauty Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 10.7, and the rate over the past five years is 21.9. This trend accentuates the company's continued capability to drive growth.
Conclusion
Ulta Beauty Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. The company's strategic initiatives, robust financial health, and consistent growth trajectory make it a compelling investment opportunity. As Ulta Beauty Inc continues to expand its market presence and enhance its operational efficiency, it remains a strong contender for investors seeking long-term value. For those interested in exploring more companies with strong GF Scores, GuruFocus Premium members can utilize the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
