June 20, 2024
Top 10 Stock Ulta Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Ulta – Top 10 Stock in S&P 500 Consumer Discretionary Index
Ulta is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 57 (high 57% performer), Obermatt assesses an overall buy recommendation for Ulta on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Specialty Stores |
| Index | Employee Focus US, Diversity USA, NASDAQ 100, NASDAQ, S&P US Luxury, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Ulta Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 89 |
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| SENTIMENT | ||||||||
| SENTIMENT | 42 |
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| 360° VIEW | ||||||||
| 360° VIEW | 57 |
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ANALYSIS: With an Obermatt 360° View of 57 (better than 57% compared with alternatives), overall professional sentiment and financial characteristics for the stock Ulta are above average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Ulta. The only rank that is above average is the consolidated Safety Rank at 89, which means that the company has a financing structure that is safer than those of 89% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 14, which means that the share price of Ulta is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 45, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 42, which means that professional investors are more pessimistic about the stock than for 58% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 57, Ulta is better positioned than 57% of all alternative stock investment opportunities based on the Obermatt Method. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 42. The negative market view on Ulta may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Ulta only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 42 (better than 42% compared with alternatives), overall professional sentiment and engagement for the stock Ulta is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for Ulta. Analyst Opinions are at a rank of 60 (better than 60% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 87, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 87% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 5, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in Ulta. There are also only so many institutional investors holding company stock with a Professional Investors rank of 21, which means that, currently, professional investors hold less stock in this company than in 79% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 42 (less encouraging than 58% compared with investment alternatives), Ulta has a reputation among professional investors that is below that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: Ulta Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 14 (worse than 86% compared with alternatives), Ulta shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Ulta. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 54, which means that the stock price compared with what market professionals expect for future profits is lower than for 54% of comparable companies, indicating a good value concerning Ulta's profit levels. But Price-to-Sales is 23 which means that the stock price compared with what market professionals expect for future profits is higher than for 77% of comparable companies, indicating a low value concerning Ulta's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 16 and for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 14, is a sell recommendation based on Ulta's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Ulta is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: Ulta Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 45 (better than 45% compared with alternatives), Ulta shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Ulta. Sales Growth has a rank of 71 which means that currently, professionals expect the company to grow more than 71% of its competitors. Capital Growth is also above 31% of competitors with a rank of 64. But Profit Growth only has a rank of 31, which means that currently professionals expect the company to grow its profits less than 69% of its competitors. And Stock Returns have also been below average with a rank of only 37. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 45, is a hold recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Ulta Debt Financing Safety very solid
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 100 |
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| REFINANCING | ||||||||
| REFINANCING | 41 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 89 |
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ANALYSIS: With an Obermatt Safety Rank of 89 (better than 89% compared with alternatives) for 2024, the company Ulta has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Ulta is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Ulta. Leverage is at a rank of 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Liquidity is also good at a rank of 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 41, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 59% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 89 (better than 89% compared with alternatives), Ulta has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Ulta. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Ulta Below-Average Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 14 |
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| GROWTH | ||||||||
| GROWTH | 45 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 31 |
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ANALYSIS: With an Obermatt Combined Rank of 31 (worse than 69% compared with investment alternatives), Ulta (Specialty Stores, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Ulta are low in value (priced high) with a consolidated Value Rank of 14 (worse than 86% of alternatives) and show below-average growth (Growth Rank of 45) but are safely financed (Safety Rank of 89), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 31, is a hold recommendation based on Ulta's financial characteristics. As the company Ulta's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 14) and low growth (Obermatt Growth Rank of 45), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 89) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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