Ulta Beauty, Inc. (ULTA): what the price requires
At today's price, Ulta Beauty, Inc. (ULTA) is priced for +2.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ULTA
Headline
| Field | Value |
|---|---|
| Ticker | ULTA |
| Company | Ulta Beauty, Inc. |
| Current price | $472.55/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.6% |
| Operating margin today | 12.9% |
| Margin compression implied | -10.3pp |
| Implied growth | 2.0% |
| Multiple paid | 15x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.92σ |
| cohort percentile (of 210 peers) | 33 |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.62x | 5 | expensive |
| Earnings | 1.51x | 4 | expensive |
| Relative | 1.09x | 5 | expensive |
| Growth | 0.63x | 3 | justifies |
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)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $850.90 | 0.56x | yes | FCF base $1.2B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.7%, 6yr projection |
| DCF Exit Multiple | Growth | $744.33 | 0.63x | yes | Exit EV/EBITDA: 10.1x / 12.1x / 14.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $577.47 | 0.82x | yes | P/E 20x (static sector reference · 2026-04), scenarios: 16.6x / 20.0x / 23.4x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $292.35 | 1.62x | yes | BV/sh $58.71, ROE (TTM) 46.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $765.86 | 0.62x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $536.16 | 0.88x | yes | Rev $12.7B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $320.16 | 1.48x | yes | EPS $26.68, growth 7% (input: historical EPS growth), PEG=2.66 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $344.09 | 1.37x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.57B × (1−21%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $469.64 | 1.01x | yes | BV $58.71 + 5yr PV of (ROE (TTM) 46.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $187.73 | 2.52x | yes | √(22.5 × EPS $26.68 × BVPS $58.71) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $553.14 | 0.85x | yes | EBITDA $1.89B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $229.42 | 2.06x | yes | FCF $1130.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $483.96 | 0.98x | yes | EPS $26.68 × (8.5 + 2×6.6%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $50.53 | 9.35x | yes | BV $58.71 × (ROIC 7.5% / WACC 8.7%) |
| P/Sales Sector | Relative | $433.59 | 1.09x | yes | Revenue $12.71B × sector P/S 1.5x |
| PEG Fair Value | Relative | $263.00 | 1.80x | yes | EPS $26.68 × (PEG 1.5 × growth 6.6% (input: historical EPS growth)) → PE 9.9x |
| Earnings Yield | Earnings | $288.43 | 1.64x | yes | EPS $26.68 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $76.4m |
| Net debt / NOPAT (after-tax) | -0.06x (net cash) |
| Net debt / operating income (pre-tax) | -0.05x (net cash) |
| Share count CAGR (buyback) | -4.4% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Ulta sells the full spectrum of beauty under one roof, prestige next to mass, anchored by a loyalty program its FY2025 10-K calls an important tool to increase retention of existing guests and to enhance their loyalty to the Ulta Beauty brand, feeding a CRM that turns repeat guests into the engine of comparable-sales growth.
- The biggest risk is the multiple, not the business: at roughly $456 a share against trailing EPS near $26.68, the price already credits steady mid-single-digit comps and margin discipline, so any stall in either compresses a full valuation fast.
- Q1 fiscal 2026 set the bar high, with net sales of $3.16B, comparable sales up 5.3%, gross margin widening to 40.1%, and a raised full-year EPS outlook of $28.36 to $28.80; the next quarterly comp print is the read on whether the momentum holds.
Bull Case
The earnings trajectory is the cleanest part of the Ulta story, and it has been pointing the right way. Q1 fiscal 2026 delivered net sales of $3.16B with comparable sales up 5.3%, and the composition of that comp is the tell: average ticket rose 3.7% while transactions rose 1.6%, so guests are both coming back and spending more per visit. Gross margin widened from 39.1% to 40.1% on lower inventory shrink and better merchandise margins, and the company raised full-year EPS guidance to a range of $28.36 to $28.80 while holding its top-line and comp targets. A retailer growing comps mid-single-digit while expanding gross margin is converting traffic into profit, not buying it with promotions.
Underneath the quarter sits a structural advantage built on the loyalty base. Ulta's FY2025 10-K describes the rewards program as an important tool to increase retention of existing guests and to enhance their loyalty to the Ulta Beauty brand, paired with a CRM platform that enables sophisticated analysis of the customer data to drive awareness of new products and events. The same filing names what the beauty enthusiast actually values, creating a welcoming and inclusive environment, providing trusted guidance, offering convenience and ease, which is the part Amazon and the mass channel cannot easily replicate: the store as a destination for discovery, not just a shelf. The prestige-plus-mass assortment under one roof is the format, and the loyalty data is the flywheel that keeps the assortment relevant.
The returns and the capital discipline finish the case. Return on equity runs near 46%, book value sits at about $58.71 a share, and the company throws off free cash flow above $1.1B. It carries net cash of roughly $76M, so the balance sheet is a non-issue, and the share count has fallen at about 4.4% a year as buybacks retire stock; the company has signaled a higher repurchase target of $1.5B. The analyst community remains constructive, with a Buy consensus and Bank of America reaffirming a Buy rating after the quarter. A business earning 46% on equity, growing comps, widening margins, and shrinking its share count is the textbook compounder, and the bull case is simply that this continues.
Bear Case
The bear case starts with how Ulta is spending its cash. The company is buying back stock aggressively, retiring shares at about 4.4% a year and signaling a larger $1.5B repurchase target. Buybacks are capital allocation, and the test is the price paid: at roughly $456 a share against trailing EPS near $26.68, the company is retiring stock at a full multiple, not a distressed one. Each dollar spent there is a dollar not spent on new formats, international expansion, or a margin reinvestment that might extend the runway. Buying back stock at a rich price returns less per dollar than buying it cheap, and a buyback at the top of a multiple is a bet management makes with shareholders' money.
The valuation itself is the larger concern, and it cuts the opposite way from a deep-value story. Group the methods into families and the picture is not cheap-stock, it is fully-valued-stock. The asset-based methods, which value the business on book value plus the excess returns it earns, land below the price, with the simple excess-return method near $292 and the Graham floor near $188. The price sits well above where the asset lens reaches. The earnings-power methods, which capitalize what the business earns today without growth, land in the high $200s to mid $300s, with normalized earnings power near $345 and a zero-growth free-cash-flow capitalization near $229. Only the relative-multiple and growth methods reach the price. That is a coherent picture for a high-return retailer, but it leaves no margin: the price is paying for the comps and the margins to keep doing what they did last quarter, with little discount for the chance they do not.
The operating risks that could break that assumption are the ordinary ones for a specialty retailer, and the company lists them plainly. Its 10-K warns that comparable sales depend on the general national, regional, and local economic conditions and corresponding impact on customer spending levels and on actions by our existing or new competitors. Beauty is discretionary, the prestige tier is the first to feel a consumer pullback, and the competitive front is crowded with Sephora, the mass channel, and online discounters all chasing the same wallet. The balance sheet gives this business resilience, with net cash and free cash flow above $1.1B, so the bear is not about survival. It is about a fully priced compounder meeting a discretionary-spending air pocket, where the multiple has further to fall than the earnings do.
Valuation
What the price assumes is, unusually for a richly-followed name, not very much. Inverting today's price of about $456 implies the business grows operating profit only in the low single digits from here, on roughly the operating margin it already earns near 12.4%. That is a modest bet for a retailer compounding comps at 5%, and it lands inside the range of what the company has demonstrated rather than far beyond it. The price is not demanding heroics; it is demanding that Ulta keep being Ulta.
The disagreement among the methods sorts cleanly into who reaches the price and who does not. The relative-multiple methods land right at it, with the sector P/E approach near $577 on a 20x multiple and the price-to-sales approach near $434, so peer multiples roughly bracket the price. The growth methods land at or above it, with the perpetual-growth cash-flow method near $854 and the exit-multiple version near $726 by holding today's EV/EBITDA of about 10x flat. The asset methods sit below, with the simple excess-return method near $292, and the earnings-power methods sit below as well, with normalized earnings power near $345. So the pattern is a price defended by peer multiples and forward growth, with the static asset and earnings-power lenses calling it expensive. For a business earning 46% on equity, that split is exactly what theory predicts: book-value-anchored methods systematically under-value a franchise whose value lives in returns, not assets.
A word on the analyst targets, which sit well above the framework's read: a Buy consensus and a BofA target in the high $600s credit a longer growth runway and a higher terminal multiple than the static methods will grant. The reconciliation is straightforward. The street is extrapolating the comp and margin trajectory forward at a premium multiple; the value-anchored methods here hold today's economics flat. The balance sheet sits under all of it as a floor: net cash of about $76M, free cash flow above $1.1B, and a share count falling 4.4% a year. The buyer is underwriting continuity, not a turnaround, and the question that matters is durability of the comp, not survival of the company.
Catalysts
The Q1 fiscal 2026 report is the freshest and most important catalyst. Net sales reached $3.16B and GAAP diluted EPS came in at $7.74, both ahead of expectations, on comparable sales up 5.3% driven by a 3.7% rise in average ticket and a 1.6% rise in transactions. Gross margin improved to 40.1% from 39.1% a year earlier on reduced inventory shrink and better merchandise margins, and fragrances was the standout category, rising to 12% of revenue from 11%. On the strength of the quarter, management raised full-year EPS guidance to $28.36 to $28.80 while leaving its 6% to 7% net sales growth and 2.5% to 3.5% comparable-sales targets unchanged.
Analyst sentiment stayed constructive through the print. The consensus rating is Buy, and Bank of America reaffirmed its Buy rating after the quarter. The capital-return picture is the other live development, with the company signaling a higher $1.5B share-repurchase target, which supports EPS through a shrinking share count even if sales growth holds steady.
The next quarterly comparable-sales report is the catalyst to watch. The full-year guidance assumes comps in the 2.5% to 3.5% range, so a 5%-plus quarter like Q1 builds a cushion, while any slip toward the low end of the range would test the part of the price that depends on the comp staying healthy. Fragrance momentum and the pace of new-store and loyalty-program contribution are the line items inside the comp that will signal which way the trend is breaking.
Peer Cohorts (Per Segment, With Filing Citations)
Specialty beauty retail (single segment) (reported)
- SBH (SALLY BEAUTY HOLDINGS, INC.)
- (no filing in the citation store)
- BBWI (BATH & BODY WORKS, INC.)
- (no filing in the citation store)
- VSCO (VICTORIA'S SECRET & CO.)
- (no filing in the citation store)
- SIG (SIGNET JEWELERS LIMITED)
- (no filing in the citation store)
- WSM (WILLIAMS-SONOMA, INC.)
- (no filing in the citation store)
- BBY (BEST BUY CO., INC.)
- (no filing in the citation store)
- GME (GameStop Corp.)
- (no filing in the citation store)
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.
- 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.
Sources
Ulta Q1 FY2026 earnings release, June 2026 · company capital-return commentary, June 2026 · BofA note, June 26, 2026