ULTA Stock Risk & Deep Value Analysis
Ulta Beauty Inc
Consumer Cyclical • Specialty Retail
DVR Score
out of 10
What You Need to Know About ULTA Stock
We analyzed Ulta Beauty Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran ULTA through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
ULTA Risk Analysis & Red Flags
What Could Go Wrong
Ulta's recent operating margin contraction, driven by elevated SG&A for marketing and international expansion, could persist if consumer demand softens or competitive pressures intensify. This would compress profitability, undermine EPS growth, and lead to further analyst downgrades.
Risk Matrix
Overall
Moderate
Financial
Low
Market
Medium
Competitive
Medium
Execution
Medium
Regulatory
Low
Red Flags
- ⚠
Operating margin contraction in Q4 FY2025 due to elevated SG&A.
- ⚠
FY2026 EPS guidance ($28.05-$28.55) below sell-side consensus ($23.96, though company guidance is generally higher).
- ⚠
Analyst target downgrades from multiple firms post-earnings.
Upcoming Risk Events
- 📅
Sustained downturn in discretionary consumer spending
- 📅
Increased competitive pressure from online retailers or new entrants
- 📅
Failure to control SG&A expenses and reverse operating margin contraction
When to Reconsider
- 🚪
Exit if comparable sales growth turns negative for two consecutive quarters.
- 🚪
Sell if operating margins continue to compress significantly despite top-line growth.
- 🚪
Exit if FY2026 EPS guidance is significantly reduced below current estimates.
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What Does Ulta Beauty Inc (ULTA) Do?
Market Cap
$23.30B
Sector
Consumer Cyclical
Industry
Specialty Retail
Employees
20,000
Ulta Beauty, Inc. operates as a specialty beauty retailer in the United States, Mexico, and Kuwait. The company offers branded and private label beauty products, including cosmetics, fragrance, haircare, skincare, bath and body products, professional hair products, and salon styling tools through its Ulta Beauty stores, shop-in-shops, Ulta.com website, and its mobile applications. It also provides beauty services, including hair, makeup, brow, and skin services at its stores. The company was formerly known as ULTA Salon, Cosmetics & Fragrance, Inc. and changed its name to Ulta Beauty, Inc. in January 2017. Ulta Beauty, Inc. was incorporated in 1990 and is based in Bolingbrook, Illinois.
Visit Ulta Beauty Inc WebsiteInvestment Thesis
Ulta Beauty is a market leader in specialty beauty retail, poised for consistent, stable growth driven by its effective omnichannel strategy, robust loyalty program, and continued market share gains. While not a 10x growth opportunity due to its maturity and scale, it offers a compelling investment for those seeking compounding returns from a high-quality, resilient consumer discretionary business.
Is ULTA Stock Undervalued?
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ULTA Price Targets & Strategy
12-Month Target
$750.00
Bull Case
$810.00
Bear Case
$475.00
Valuation Basis
26.5x forward P/E applied to the midpoint of company's FY2026 EPS guidance of $28.30 (26.5 * 28.30 = $750.00)
Entry Strategy
Consider accumulation on dips towards the $500-$520 range, which aligns with recent support levels and offers a more favorable entry multiple relative to the company's long-term earnings potential. Dollar-cost averaging is advisable.
Exit Strategy
Profit-taking at $750-$800 range for core position. Consider a stop-loss order below $475 (the lowest analyst target) if fundamental conditions deteriorate or market sentiment shifts significantly.
Portfolio Allocation
2% for moderate risk tolerance, primarily as a defensive consumer discretionary play with stable compounding growth.
Price Targets & Strategy
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Is ULTA Financially Healthy?
Valuation
P/E Ratio
20.20
Forward P/E
50.18
EV/EBITDA
25.67
PEG Ratio
50.18
Price/Book
15.42
Price/Sales
3.89
Profitability
Gross Margin
39.10%
Operating Margin
12.37%
Net Margin
9.31%
Return on Equity
44.07%
Revenue Growth
41.38%
EPS
$25.64
Balance Sheet
Current Ratio
1.41
Quick Ratio
0.38
Debt/Equity
0.02
Total Debt
$1.20B
Cash & Equivalents
$850.00M
Cash Flow
Operating Cash Flow
$1.80B
Free Cash Flow
$950.00M
EBITDA
$1.95B
Other
Beta (Volatility)
0.92
Dividend Yield
1.50%
Does ULTA Have a Competitive Moat?
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🛡️ Narrow
Moat Trend
Stable
Moat Sources
3 Identified
Ulta's brand recognition, vast store network, and popular loyalty program create a strong ecosystem that encourages repeat purchases and makes it difficult for new entrants or smaller competitors to replicate. Its hybrid 'mass-tige' strategy also appeals to a wider customer base, reinforcing its market position.
Moat Erosion Risks
- •Rapid shifts in consumer beauty trends or brand preferences.
- •Increased competition from pure-play e-commerce or direct-to-consumer brands.
- •Economic downturns disproportionately affecting discretionary beauty spending.
ULTA Competitive Moat Analysis
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ULTA Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral (Retail investor sentiment generally follows broad market and earnings reactions for established companies. No specific data indicates strong bull or bear case.)
Institutional Sentiment
Neutral/Slightly Negative (Recent analyst target downgrades; Zacks Rank downgraded from 'Strong Buy' to 'Hold' in February 2026.)
Insider Activity (Form 4)
Kecia Steelman (President & CEO) received 37,070 time-based stock options, 68,000 performance-based options, and 10,889 restricted shares on March 31, 2026, at an exercise price of $522.71/share, indicating standard compensation rather than outright buying or selling.
Options Flow
Normal options activity (No specific unusual options flow data was provided in the research to suggest significant institutional positioning beyond typical hedging or directional bets for a large-cap stock.)
Earnings Intelligence
Next Earnings
Estimated June 2026 (for Q1 Fiscal 2026)
Surprise Probability
Medium (Q4 FY2025 saw a revenue beat but an EPS miss, indicating execution challenges despite strong sales.)
Historical Earnings Pattern
Stock historically reacts strongly to comparable sales growth and forward guidance. Q4 FY2025 earnings saw an ~8-10% intraday stock decline despite a revenue beat, primarily due to the EPS miss and conservative guidance, suggesting investor sensitivity to profitability and outlook.
Key Metrics to Watch
Competitive Position
Top Competitor
TJX (TJ Maxx / Marshalls, owning beauty sections) or conceptually Sephora (private)
Market Share Trend
Gaining (Ulta's comparable sales growth of 5.8% and 5.4% outpaced industry trends in FY2025).
Valuation vs Peers
Trading at a P/E multiple that is reasonable for a market-leading specialty retailer with consistent growth, but not at a discount. Its ~18.6x forward P/E is in line with or slightly above other stable retail peers, reflecting its market leadership and profitability.
Competitive Advantages
- •Comprehensive product assortment (mass to prestige)
- •Loyalty program with 40M+ members
- •Extensive physical store footprint (~1,500+ stores)
- •Omnichannel shopping experience
Market Intelligence
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What Could Drive ULTA Stock Higher?
Near-Term (0-6 months)
- •Q1 Fiscal 2026 Earnings Report (Estimated June 2026)
- •Continued execution of Space NK acquisition integration
- •Successful holiday season marketing campaigns (late 2026)
Medium-Term (6-18 months)
- •Expansion of international footprint and loyalty program abroad
- •Further growth in beauty services offerings and digital engagement
- •Strategic partnerships with emerging beauty brands
Long-Term (18+ months)
- •Dominance in the evolving omnichannel beauty retail landscape
- •Leveraging data from loyalty program for personalized customer experiences
- •Market share capture from department stores and smaller specialty retailers
Catalysts & Growth Drivers
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What's the Bull Case for ULTA?
- ✓
Acceleration in comparable sales growth driven by transaction volume
- ✓
Stabilization or expansion of operating margins
- ✓
Successful integration and profitability contribution from Space NK
Bull Case Analysis
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Competing with ULTA
See how Ulta Beauty Inc compares to related companies
| Company | Market Cap | DVR Score | P/E | Revenue | Profit Margin | Rev Growth | |
|---|---|---|---|---|---|---|---|
Ulta Beauty Inc ULTA | $23.3B | 0.8 | 20.2 | $12.4B | 9.3% | 41.4% | |
Amazon.com Inc AMZN | $2.8T | 2.0 | 30.4 | $638.0B | 12.2% | 14.2% | Compare → |
Home Depot Inc HD | — | 0.5 | — | — | — | — | Compare → |
McDonald's Corp MCD | $221.1B | 0.1 | 26.4 | — | — | — | Compare → |
Nike Inc NKE | $65.8B | 1.0 | 29.2 | $46.3B | 4.8% | -2.7% | Compare → |
Tesla Inc TSLA | $1.5T | 4.2 | 380.1 | $94.8B | 4.0% | 2.3% | Compare → |
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How Ulta Beauty Inc Makes Money
Ulta Beauty operates as the largest beauty retailer in the United States, offering a diverse range of cosmetic, fragrance, skin care, hair care products, and salon services. The company caters to a broad customer base by featuring both prestige and mass-market brands across its extensive network of physical stores and a robust e-commerce platform. Its highly successful Ultamate Rewards loyalty program is central to driving customer engagement and repeat purchases, while the integration of in-store beauty services further enhances the customer experience.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Ulta Beauty Inc (ULTA)?
As of April 15, 2026, Ulta Beauty Inc has a DVR Score of 0.8 out of 10, placing it in the "Distressed" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Ulta Beauty Inc?
Ulta Beauty Inc's market capitalization is approximately $23.3B. The company operates in the Consumer Cyclical sector within the Specialty Retail industry.
What ticker symbol does Ulta Beauty Inc use?
ULTA is the ticker symbol for Ulta Beauty Inc. The company trades on the NMS.
What is the risk level for ULTA stock?
Our analysis rates Ulta Beauty Inc's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of ULTA?
Ulta Beauty Inc currently has a price-to-earnings (P/E) ratio of 20.2. This is in line with broader market averages.
Does Ulta Beauty Inc pay a dividend?
Yes, Ulta Beauty Inc pays a dividend with a current yield of approximately 1.50%.
Is Ulta Beauty Inc's revenue growing?
Ulta Beauty Inc has reported revenue growth of 41.4%. The company is showing strong top-line momentum.
Is ULTA stock profitable?
Ulta Beauty Inc has a profit margin of 9.3%. The company is profitable but margins are modest.
How often is the ULTA DVR analysis updated?
Our AI-powered analysis of Ulta Beauty Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on April 15, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for ULTA (Ulta Beauty Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.