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Ulta’s Strong Earnings Is the Latest Beauty Beat


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Ulta Beauty
turned in another strong quarter, showing that beauty continues to be a standout in the choppy world of retail. If valuation is anything to go by, the rally could continue.

Ulta (ticker: ULTA) was the last of the major beauty retailers to report results last night, delivering better earnings and sales even as the overall picture for consumer-discretionary spending remains mixed. Management also raised its fiscal 2022 diluted earnings-per-share guidance for the third consecutive quarter to $22.60-$22.90 from $20.70-$21.20 (as compared with $21.44, previously).

 Barron’s has noted before that Ulta and others could deliver strong results. And Thursday’s report comes after
e.l.f. Beauty
(ELF) delivered a beat-and-raise quarter in early November, followed by
‘s (
) results, which included a top-line beat. Even
Estée Lauder
(EL), the laggard due to its exposure to international markets hurt by the war in Ukraine, a stronger dollar, and depressed travel, managed to deliver per-share profits ahead of expectations, although its outlook was light.

E.l.f. stock has nearly doubled since Barron’s recommend the shares in early 2021; while it’s fallen year to date, Estée Lauder is up more than 17% since we highlighted the stock in summer of 2020.

The idea that cosmetics are resilient in times of economic softness isn’t new, but the industry is getting an even greater boost from the broader reopening, which has many people looking to refresh their makeup as in-person work, school, and social events have returned.

All major parts of Ulta’s business grew by double-digit percentages, with skin care was the strongest. That suggests consumers aren’t abandoning the self-care routines they adopted during the pandemic—and now they’re buying even more cosmetics.

Ulta stock is up 15% this year, and last night’s results are just the latest in a string of positive quarters for the company. Yet the shares still trade for 20.8 times forward earnings—perhaps not a bargain, but below their five-year average of 23 times, and by far the cheapest of all its peers.

In that sense, the valuation seems to have more room to expand as earnings keep climbing.

That said the company did raise a couple of points in the quarter that could give investors pause. Ulta said it was happy with Black Friday/Cyber Monday but that sales overall in November moderated, and even bullish analysts are bracing for some margin pressure going forward. That in turn could weigh on earnings going forward, especially if some beauty demand was pulled forward amid a broader reopening this year.

Still, if the pace of bottom-line growth does continue—a trajectory supported by a record number of shoppers in its loyalty program and very strong comparable sales—the shares could keep reaping the benefits.

Write to Teresa Rivas at


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