ULTA
ULTAUlta Beauty is a leading specialty beauty retailer in the United States, primarily operating in the retail stores sector.
The company’s identity is built on its unique combination of a wide range of prestige and mass cosmetics, along with an in-salon salon services, creating a distinctive one-stop beauty destination.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy ULTA Today?
Of course. Here is a comprehensive analysis of whether ULTA is worth buying.
Technical Analysis & Price Action ULTA is exhibiting strong bullish momentum, significantly outperforming the market with gains over 18% in the last three months. While its beta suggests lower volatility than the broader market, the stock is trading near its 52-week high, which could indicate it's approaching overbought conditions in the short term. Investors should be cautious of a potential pullback after such a sharp rally.
Fundamental Health & Operations Fundamentally, ULTA is a robust company with solid revenue growth and impressive gross profit margins around 40%. Its financial health is excellent, characterized by minimal debt and strong interest coverage. However, a slight decline in net profit margin due to increased expenses and a low inventory turnover rate point to some operational inefficiencies that need monitoring.
Valuation & Risk Assessment Valuation is the primary concern; ULTA appears richly priced with a high P/E ratio and an extremely elevated P/B ratio of over 11. This suggests the market has already priced in significant future growth, leaving little room for error. The main risks are not from debt or short-sellers but from the stock's high valuation potentially contracting if growth disappoints or consumer spending weakens.
Buy Recommendation Based on the analysis, a cautious approach is advised. ULTA's strong operational fundamentals and momentum are compelling for long-term growth investors who believe in the company's strategy. However, the current premium valuation makes it vulnerable to a downturn. Therefore, it may be better to wait for a more attractive entry point during a market pullback rather than buying at near-peak levels.
ULTA 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Of course. Here is a 12-month strategic outlook for ULTA stock:
12-Month Outlook for ULTA
The outlook for ULTA is cautiously optimistic, contingent on its ability to justify its premium valuation. Key catalysts include continued market share gains in the prestige beauty segment and successful execution of new initiatives like store remodels and targeted marketing. The primary risk is a significant contraction in its valuation multiples if consumer spending softens or quarterly earnings merely meet, rather than exceed, high market expectations. Given the stock's strong run toward 52-week highs, a near-term pullback is plausible; therefore, a strategic entry point in the high $500s to low $600s appears more attractive than chasing the current price, with an initial 12-month target range of $700-$750 assuming execution remains solid.
Wall Street Consensus
Most Wall Street analysts are optimistic about ULTA's 12-month outlook, with consensus target around $663.85, indicating expected upside potential.
Bulls vs Bears: ULTA Investment Factors
Overall, ULTA has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Boosted Financial Outlook: Company raised sales and profit forecasts for second straight quarter.
- Strong Quarterly Earnings Beat: Q3 earnings and 12.9% sales growth significantly exceeded expectations.
- Positive Analyst Recognition: JPMorgan raised price target to $606 citing strong market position.
- Long-Term Growth Prospects: Identified as top retail stock for 2026 due to brand strength.
- Record Stock Performance: Shares surged to record highs following strong quarterly results.
Bearish
- Recent Price Volatility: Stock recently declined 1.9% despite broader market gains.
- Valuation Concerns: Some investors question if strong rally makes stock overvalued.
- Market Sentiment Swings: Performance can be sensitive to changing retail consumer trends.
ULTA Technical Analysis
ULTA has demonstrated exceptional price performance with strong momentum driving significant gains across multiple timeframes.
Short-term performance shows robust upward trajectory with ULTA gaining 12.04% over one month and 18.48% over three months, substantially outperforming the market by 15.11% during this period. The stock's beta of 0.853 indicates lower volatility than the broader market while delivering superior returns.
Currently trading at $664.85, ULTA sits near the upper end of its 52-week range ($309.01-$675.65), approximately 2% below the yearly high. Despite the proximity to peak levels, the modest maximum drawdown of -25.51% suggests controlled downside risk, though the stock may be approaching overbought territory given the recent sharp appreciation.
| Period | ULTA Return | S&P 500 |
|---|---|---|
| 1m | +10.3% | +1.3% |
| 3m | +20.9% | +5.7% |
| 6m | +39.6% | +10.6% |
| 1y | +63.0% | +16.5% |
| ytd | +7.1% | +1.1% |
ULTA Fundamental Analysis
Revenue & Profitability ULTA demonstrates solid revenue performance with quarterly revenue reaching $2.86 billion in Q3 2025, maintaining growth from Q2's $2.79 billion. Profitability metrics show a consistent gross profit margin of 40.4% in Q3, though the net profit margin declined to 8.1% from 9.4% in the prior quarter, primarily due to increased operating expenses. The company maintains healthy operating profitability with an 11.0% operating margin.
Financial Health ULTA maintains a conservative debt profile with a low debt ratio of 36.7% and strong interest coverage of 76.3x, indicating minimal financial risk. The current ratio of 1.33 demonstrates adequate short-term liquidity, though the quick ratio of 0.25 suggests limited immediate cash availability relative to current liabilities. The company's capital structure appears well-balanced with moderate leverage.
Operational Efficiency Operational efficiency shows mixed results with a respectable ROE of 8.8%, reflecting effective equity utilization. However, inventory turnover remains low at 0.62 times, contributing to a lengthy cash conversion cycle of 112 days, indicating potential working capital inefficiencies. Asset turnover of 0.41 suggests moderate efficiency in generating revenue from the company's asset base.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Try Now & Get Tesla Stock RewardValuation Analysis: Is ULTA Overvalued?
Of course. Here is the valuation analysis for ULTA.
Valuation Level: ULTA's forward P/E of approximately 25x suggests the market is pricing in significant growth expectations. However, the stock appears richly valued based on several key metrics. The Price-to-Book (P/B) ratio of 11.33 is extremely high, indicating the market value far exceeds the company's accounting book value. Furthermore, the exceptionally high EV/EBITDA of over 66x, combined with a negative PEG ratio implying negative earnings growth expectations, points to a potentially overvalued stock relative to its current earnings power.
Peer Comparison: A direct comparison against definitive industry averages is not possible with the provided data. However, the analysis can still be contextualized by considering general market benchmarks. A P/E of 25x is above the long-term market average, and a P/B of over 11x is substantially higher than that of many mature consumer discretionary or retail companies. This significant premium suggests the market is valuing ULTA far above typical industry valuation levels, banking heavily on its ability to deliver exceptional future growth to justify its current price.
Investment Risk Disclosure
Volatility Risk: ULTA demonstrates moderate volatility risk, with a Beta of 0.853 indicating it is slightly less volatile than the broader market. However, investors should note its 1-year maximum drawdown of -25.51%, which reflects a significant historical loss potential during market downturns.
Other Risks: ULTA exhibits no short interest, which suggests a lack of strong negative sentiment from sophisticated investors. The primary risks appear unrelated to liquidity or bearish speculation but may stem from company-specific factors such as execution of its growth strategy or consumer discretionary spending trends.
FAQs
Bullish, given strong momentum, fundamental improvements, and supportive analyst sentiment. Recently raised financial guidance, robust sales growth exceeding expectations, and a favorable debt profile create a compelling case. This stock is suitable for growth-oriented investors comfortable with its elevated valuation.
Based on the provided data, ULTA stock appears overvalued.
The primary red flags are the extremely high Price-to-Book (P/B) ratio of 11.33, which indicates the stock price is trading at a massive premium to its net asset value, and a forward P/E of approximately 25x, which is above the historical market average and demands high future growth. The alarmingly high Enterprise Value to EBITDA (EV/EBITDA) ratio of over 66x and a negative PEG ratio further suggest the current price is not justified by its earnings power or growth prospects.
While ULTA demonstrates solid profitability with a 40.4% gross margin, the valuation metrics imply the market is pricing in near-perfect execution of significant future growth. Given the declining net profit margin and the lofty premium compared to typical retail valuations, the stock's price seems to have overshot its fundamental support, leading to a conclusion of overvaluation.
Based on the provided information, here are the key risks of holding ULTA stock:
1. Consumer Discretionary Spending Sensitivity: The company is highly vulnerable to economic downturns or shifts in consumer confidence, as reduced discretionary spending would directly impact sales of its non-essential beauty products. 2. Execution and Growth Strategy Risk: With the stock trading near 52-week highs following significant appreciation, there is heightened risk associated with the company's ability to execute its growth strategy and meet elevated market expectations. 3. Operational Inefficiency and Margin Pressure: Declining net profit margins coupled with a low inventory turnover ratio and a lengthy cash conversion cycle of 112 days indicate potential inefficiencies that could pressure profitability. 4. Valuation and Momentum Dependency: The stock's strong recent performance places it near overbought territory, creating a risk of a correction if the positive momentum falters or if growth fails to justify the current valuation.
Of course. Here is a strategic forecast for ULTA stock through 2026.
ULTA Stock Forecast through 2026
1. Target Price Range: * Base Case (2026): $750 - $850. This assumes steady execution, moderate growth in the beauty market, and stable valuation multiples. * Bull Case (2026): $900 - $1,000. This scenario requires ULTA to exceed expectations through successful new brand partnerships, a significant boost in high-margin services, and capturing a larger share of the luxury beauty segment.
2. Key Growth Drivers: * Prestige Beauty Dominance: ULTA's unique strategy of offering both mass and prestige brands under one roof is a key differentiator. Continued expansion of exclusive and emerging prestige brands will drive higher margins and customer loyalty. * Growth in High-Margin Services: The expansion of salon services, skin bars, and other in-store experiences provides a recurring revenue stream that is less susceptible to e-commerce competition and commands higher profitability. * Loyalty Program Monetization: The Ultamate Rewards program is a massive asset. Enhanced personalization and targeted marketing within this loyal customer base can significantly increase customer lifetime value and spending frequency.
3. Main Assumptions: * The broader beauty market continues to demonstrate resilience, with consumer spending remaining stable despite economic fluctuations. * ULTA successfully navigates competition from both Sephora and mass retailers without engaging in prolonged, margin-damaging price wars. * The company maintains its operational discipline, keeping SG&A expenses in check while investing in strategic growth initiatives.
4. Forecast Uncertainty: * This forecast is highly sensitive to consumer discretionary spending. A significant economic downturn could negatively impact sales more than projected. * The stock's performance is also heavily dependent on valuation multiples (P/E), which could contract if growth slows or investor sentiment toward retail stocks sours.
* Analyst's Note:** The path to 2026 is promising but hinges on flawless execution. Given the current premium valuation, investors should look for potential entry points during market-wide pullbacks or if the stock reacts negatively to a single-quarter earnings miss. The long-term thesis for ULTA's market position remains intact.