Should I Buy Ulta Beauty Stock?

Should I Buy Ulta Beauty Stock After It Smashed Q2 Earnings?

The popular beauty retailer posted 60% growth in sales proving the strength of the cosmetic industry, is Ulta Beauty stock a buy though?

Ulta Beauty (NASDAQ: ULTA) stock is up over 4% today, reaching a 52-week high, after the company released better-than-expected results on Wednesday. Shareholders were especially delighted with one key impressive figure; sales jumped over 60% to $1.97 billion. 

As events, parties, and social occasions returned in the second quarter, consumers hurried to restock their makeup bags. This has comforted shareholders as it has proved that there is still a lot of growth ahead for the company as the cosmetic space is looking stronger than ever. 

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So how did Ulta Beauty do in the second quarter? 

To Ulta’s delight, customers returned to buying their beauty products during the quarter much faster than even the company expected. CFO, Scott Settersten, explained:

The resurgence of traffic in stores drove the strong comp performance.”

Let’s get down to the nitty-gritty numbers. 

For the second quarter, Ulta Beauty posted: 

  • Earnings per share of $4.56
  • Sales of $1.96 billion, a nice leap from the $1.2 billion it made in the year-ago period.
  • Net income of $250.9 million, or $4.56 per share, from $8.1 million, or 14 cents per share, year-over-year (YoY).
  • A 52.5% increase in transactions. 
  • A 26.7% rise in average customer spend. 

Despite these impressive numbers, Ulta’s store traffic volumes are still lagging behind pre-pandemic levels. This was to be expected as COVID-19 cases are continuing to spread across the U.S.not only putting people off in-store shopping, but also dampening enthusiasm for social events. 

Is Ulta stock a good buy? 

On the flip side, Ulta is still confident that fans will return to its shops to test out new makeup in the near future. The company opened seven new shops in Q2, closed one, and plans to open an additional 44 in 2021. If this doesn’t prove how confident Ulta is in its future, nothing will. 

This feeling was also translated in it upping its guidance for the full-year. Ulta now expects its sales for this year to reach $8.3 billion, up from the $7.7 billion it previously estimated for.

Ulta stock is up 38% year-to-date and after this earnings beat and heightened guidance. The company is looking like a great long-term investment for those looking to diversify their portfolio with a beauty opportunity. 

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