What Happened?
Shares of beauty, cosmetics, and personal care retailer Ulta Beauty (NASDAQ:ULTA) jumped 12.6% in the morning session after the company reported strong third-quarter earnings. Ulta blew past analysts' EBITDA and EPS estimates while revenue was slightly ahead. It is also encouraging that management slightly lifted sales guidance for the full year on the back of the solid results posted in the quarter, suggesting the momentum is expected to continue amid improved shopping trends observed by some of the retailers that have reported this earnings season. Similarly, full-year EPS guidance beat Wall Street's expectations, indicating a healthy balance of growth and profitability. Overall, we think this was a decent quarter, with some key metrics above expectations.
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What The Market Is Telling Us
Ulta’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. Moves this big are rare for Ulta and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 7.1% on the news that peer Bath & Body Works reported strong third-quarter financial results. BBWI outperformed analysts' expectations for sales and earnings, and its guidance for the next quarter also surpassed consensus estimates. This positive outlook suggests sustained consumer demand as the holiday shopping season approaches. These trends may also signal strong demand for similar offerings from industry peers like ULTA. Separately, TD Cowen analyst upgraded SBH, another peer of ULTA, reflecting increasing optimism among Wall Street analysts toward key players in the beauty and cosmetics segment.
Ulta is down 11.1% since the beginning of the year, and at $432.56 per share, it is trading 23.7% below its 52-week high of $567.18 from March 2024. Investors who bought $1,000 worth of Ulta’s shares 5 years ago would now be looking at an investment worth $1,650.
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