ULTA BEAUTY, INC. (ULTA): what the price assumes

In the published model solve dated 2026-Q2, anchored at $517.11, ULTA BEAUTY, INC. (ULTA) is priced for +2.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ULTA

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=17)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• The bar embedded in today's price is unusually low for a retailer of this quality: operating profit growing about 2.2% a year for five years, against a business that just reported "The total comparable sales increase of 5.3%" for the 13 weeks to May 2, 2026.
• The concentration risk is on the supply side rather than the customer side, with the annual report disclosing that "During fiscal 2025 and fiscal 2024, merchandise supplied by our top ten brand partners accounted for approximately 51% and 54% of our net sales, respectively".
• Second-quarter results land on August 27, 2026, and the first read on the Bath & Body Works shop-in-shop rollout that began July 12 across more than 600 stores will be inside them.

Bull Case

Work out what the price is asking for and the bull case largely writes itself. At about 15 times company-wide operating income, today's quote resolves into a requirement that operating profit grow roughly 2.2% a year over five years. Read that again, because it is not the double-digit pace a premium retailer's price usually demands. That is the level of performance a buyer at $474.98 needs in order to be made whole on the arithmetic, and it is roughly the pace of inflation.

Now set that against what the company reported for its most recent quarter. "Net sales increased $315.5 million, or 11.1%, to $3.2 billion" for the thirteen weeks to May 2, 2026, and "The total comparable sales increase of 5.3%" for that period "was driven by a 3.7% increase in average ticket and a 1.6% increase in transactions". Both parts moved in the right direction, and gross profit took 40.1% of net sales in that quarter against 39.1% a year earlier. A retailer holding price, growing basket size, adding visits and expanding merchandise margin at the same time is not a business in trouble, and it does not need much to clear a 2.2% hurdle.

The reason the numbers behave that way sits in the loyalty file. Management stated in June that over 95% of sales come from program members, which turns what looks like a chain of stores into something closer to a subscription database with shelves attached. That changes the economics of every marketing dollar, because the company is mostly talking to people it can already identify, and it changes the risk profile of a new store, since the members in a catchment area are visible before the lease is signed. The physical footprint stays cheap by retail standards: the annual report puts the average investment to open a new U.S. store at "approximately $2.4 million, which includes capital investments, net of landlord contributions, pre-opening expenses, and initial inventory, net of payables", spread across a network the latest filing describes as "1,608 stores worldwide: 1,521 Ulta Beauty stores in the U.S. located in 50 states, 85 Space NK stores located in the United Kingdom (U.K.), and 2 Space NK stores located in Ireland".

Then there is the quieter compounding. The share count has fallen about 4.4% a year over the four years to May 2026. When the growth the price requires is barely above inflation, buying back a twentieth of the company annually is not a supplementary return; it is most of the thesis. Funded borrowings are trivial next to the cash on hand, so that program is running out of operating cash flow rather than out of the credit market, which is the version that survives a bad year.

Bear Case

Look at where the capital actually goes, because the visible allocation and the real one are different. What shows up in the headlines is the buyback, roughly a twentieth of the shares a year. What does not show up on the debt line is the lease book, and for a chain of this size the lease book is the balance sheet. The quarterly filing carries operating lease liabilities of about 310 million dollars current and roughly 1.85 billion dollars non-current, so the obligation the company has genuinely committed to sits near 2.3 billion dollars on a lease-inclusive basis, against a modest net cash position of about 76 million dollars measured on funded borrowings alone. Both figures are true; they answer different questions. Rent is contractual and long-dated, comparable sales are neither, and that asymmetry is what makes a store-based retailer fragile in a way the funded-debt line never shows.

The second concern is who holds the pricing power in the supply chain. The annual report is direct: "During fiscal 2025 and fiscal 2024, merchandise supplied by our top ten brand partners accounted for approximately 51% and 54% of our net sales, respectively. There continues to be vendor consolidation within the beauty products industry". Half the sales come from ten counterparties, each of which also sells directly to consumers and into competing retailers, and each of which gets stronger as the industry consolidates. A retailer whose differentiation is assortment is only as differentiated as its suppliers permit, and the terms of that permission are renegotiated continuously.

There is also a quality question inside the good headline number. The recent comparable sales increase came mostly from ticket rather than traffic: "was driven by a 3.7% increase in average ticket and a 1.6% increase in transactions". Ticket-led comps are the pattern that flatters a beauty retailer late in a cycle, when premiumization carries the number and the underlying visit count is doing much less. Meanwhile the international expansion is currently a cost: the quarterly filing shows selling, general and administrative expenses rising to 25.8% of net sales from 24.9%, attributing the increase primarily to the acquisition of Space NK. Buying growth is a legitimate strategy, but it arrives as expense first and as margin later, if at all.

None of this is an argument that the price is stretched. The peer-multiple methods sit close to today's quote and the forward-growth methods land above it; only the asset and earnings-power lenses land below. The bear case here is narrower and more specific: the price needs only about 2.2% annual operating growth, so the question is not whether the market has over-extrapolated but whether a lease-heavy retailer with half its sales sourced from ten vendors can miss even a modest bar in a soft consumer year. The competitive field described in the annual report is wide, running from "regional and national department stores, catalog retailers, local specialty retail stores, and direct response television" to salon chains, and the discount rate itself is a live variable: each additional percentage point of cost of capital shifts the growth the price requires by about 6.2 points. That is the sensitivity of a modest bar to an immodest change in rates.

Valuation

Begin with the requirement rather than the multiple. At about 15 times company-wide operating income, the price embeds operating profit growing roughly 2.2% a year across a five-year stage, computed at about an 8.4% cost of capital with 4% growth assumed after that. These are approximations from one pass rather than measurements, but the level is the point: the price is not asking this company to do anything remarkable. It is asking it to keep pace with prices.

Set against the company's own recent record, that is a low bar; the business has been growing several times faster than the rate the price needs. The overall read on what the price assumes is that it sits within the range of ordinary outcomes rather than at the edge of them.

The methods split in a way that confirms a value-supported reading rather than a growth premium. The forward-growth approaches land above today's price, the peer-multiple methods land close to it, and the earnings-power and asset-based approaches land below. The mechanism at the low end is worth naming: the earnings-power lens averages five years of operating profit and then capitalizes that average as though the company never grows again, which for a chain that has been opening stores throughout the averaging window is a floor rather than a fair reading. When the pattern looks like this, the price is being defended by what comparable companies fetch and by forward cash flows, not by a bet that the static approaches cannot express.

The cohort comparison is where the case gets concrete, because this group is largely standing still. WSM earned an 18.0% operating margin on $7.88 billion of revenue while growing revenue 1.3%; BBWI earned 15.8% on $7.25 billion with revenue down 1.4%; SIG at 5.6%, VSCO at 4.8%, SBH at 8.2% on $3.73 billion, and BBY at 3.7% on $41.86 billion fill in the rest of the range. Against that, trailing operating profit of $1.50 billion on $12.71 billion of revenue is at the upper end of the group's profitability, and the recent comparable sales figure is well ahead of the revenue growth any of these names is posting. The multiple attached to that position is not a premium one.

Two balance-sheet readings are both worth having, and they are not in conflict once the basis is named. On funded borrowings against cash, the company holds net cash of about 76 million dollars. Include capitalized store leases, which for a 1,608-store chain is the more economically honest frame, and committed obligations run to roughly 2.3 billion dollars. Either way the company is a long distance from financial stress, and the share count has been falling about 4.4% a year over the four years to May 2026. What the price rests on is not the balance sheet and not the multiple. It is whether a modest growth requirement stays modest.

Catalysts

The next scheduled print is second-quarter results on August 27, 2026. The last one, released June 18, 2026 and covering the thirteen weeks to May 2, 2026, set the bar it will be read against: "Net sales increased $315.5 million, or 11.1%, to $3.2 billion" with "The total comparable sales increase of 5.3%". The specific line to watch is the transactions component, which contributed 1.6 points of that comp against 3.7 points from average ticket, because a comp that keeps leaning on ticket is a different quality of number than one where visits are returning.

The most concrete new development is a partnership with Bath & Body Works announced June 23, 2026, placing curated selections from that brand in more than 600 Ulta Beauty stores from July 12. This is not a pilot at the margins: BBWI is a peer of real scale in this cohort, running a 15.8% operating margin on $7.25 billion of revenue, and the arrangement pools traffic between two specialty retailers rather than adding another undifferentiated vendor to the assortment. The August print covers the first weeks of that rollout, though a meaningful read on productivity per store will take longer.

Two internal changes sit behind the numbers. The company named Kelly Garcia chief technology officer effective August 31, 2026, a notable appointment for a retailer whose loyalty database does most of the marketing work. And the Space NK business acquired in the United Kingdom and Ireland is still in its expensive phase: the last quarterly filing attributed the rise in selling, general and administrative expenses as a share of net sales primarily to that acquisition. Whether international scale starts paying for itself is a question the next few reports will begin to answer.

Peer Cohorts (Per Segment, With Filing Citations)

Specialty beauty retail (single segment) (reported)

• SBH (SALLY BEAUTY HOLDINGS, INC.)
• FY2025 10-K: …four stores, inventory, and exclusive product distribution rights. This acquisition increases the size and geographic scope of our Sally operations within Ireland. This acquisition was accounted for using the acquisition method of accounting for business combinations and funded with cash from operations. As of…
• FY2025 10-K: …statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements. ii PART I ITEM 1. B USINESS Our Company Sally Beauty Holdings, Inc. is a leading…
• BBWI (BATH & BODY WORKS, INC.)
• FY2025 10-K: …and efficiencies, including additional storage and technology enhancements. Digital Experience In addition to our in-store experience, we strive to create a customer-centric digital platform that integrates the digital and physical brand experience and enables convenience for the customer when desired. Our digital…
• FY2025 10-K: …nearly every week. 2 Table of Contents Sourcing and Logistics Our predominantly domestic, vertically integrated supply chain enables us to continually deliver newness and meet the demands of our omnichannel customers and changing macro trends with speed and agility. Our supplier base includes long-standing vendor…
• VSCO (VICTORIA'S SECRET & CO.)
• FY2025 10-K: …business conditions and various other factors. Our wholesale arrangements with our partners typically have an initial term of five years, with an option to renew, subject to customary conditions. Wholesale prices, which vary by product category, are generally based on a discount to the suggested retail price. Revenue…
• FY2025 10-K: …our international partners. We operate as a single segment designed to seamlessly serve customers worldwide through stores and digital channels. On December 30, 2022, we completed our acquisition of AdoreMe, Inc. ("Adore Me"), a digitally-native intimates brand. For additional information, see Note 2 to the…
• SIG (SIGNET JEWELERS LIMITED)
• FY2025 10-K: …brand. Refer to Item 2 for additional information on the Company's real estate portfolio. North America Brands The North America reportable segment operates jewelry stores in malls, mall-based kiosks and off-mall locations throughout the US and Canada, as well as online. Its US national brands principally include…
• FY2025 10-K: …and Jared Vault); Banter by Piercing Pagoda; Diamonds Direct; Rocksbox; and Digital brands, James Allen and Blue Nile. ◦ In Canada, the segment operates under the Peoples brand (Peoples Jewellers). • The International reportable segment had 263 locations in the UK and Republic of Ireland as of February 1, 2025, and…
• WSM (WILLIAMS-SONOMA, INC.)
• FY2025 10-K: …and to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion on the effect the global supply chain disruption has had on our results of operations. COMPETITION AND SEASONALITY The specialty e-commerce and retail businesses are highly competitive.…
• FY2025 10-K: …earn points for each qualifying purchase. Customers can earn points through spend on both our private label and co-branded credit cards, or can earn points as part of our non-credit card related loyalty program. Points earned through both loyalty programs enable members to receive certificates that may be redeemed on…
• BBY (BEST BUY CO., INC.)
• FY2025 10-K: 1 Missouri 14 Total Domestic store count 957 Montana 4 Square footage (in thousands) 36,539 (1) Includes 20 Pacific Sales stores, 25 Best Buy Outlet Centers and 21 Yardbird stand-alone stores. International Stores The location and total square footage of our International segment stores at the end of fiscal 2025 were…
• FY2025 10-K: …the program's policies, standards and processes. They also help ensure awareness that securing customer information and honoring our privacy promises are core employee obligations, as highlighted in our Code of Ethics and reinforced through our Valuable Information Protection training program. 18 Item 2. Properties.…
• GME (GameStop Corp.)
• FY2025 10-K: …and pedestrian areas. These locations provide easy access and high frequency of visits and, in the case of strip centers and high-traffic pedestrian stores, high visibility. We target strip centers that are conveniently located, have a mass merchant or supermarket anchor tenant and have a high volume of customers. As…
• FY2025 10-K: …States include retail operations in 50 states; our ecommerce website www.gamestop.com; and our GameStop Pro ® loyalty program. The United States segment also includes general and administrative expenses related to our corporate offices in Grapevine, Texas. Segment results for Canada include retail and ecommerce…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.