Shares of beauty retailer Ulta Beauty (ULTA) jumped in after-hours trading after posting Q3 earnings that beat expectations. This can also be attributed to the company’s raised outlook for 2024, which made things better. Earnings per share came in at $5.14 versus analysts’ consensus estimate of $4.56 per share. In addition, sales increased by 1.6% year-over-year, with revenue hitting $2.53 billion. this also beat analysts’ expectations of $2.5 billion.
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The quarter’s results were driven by new store openings and a 0.6% increase in comparable sales, which were made up of a 0.5% increase in transactions and a 0.1% increase in average ticket. However, Ulta’s gross margin declined due to fixed costs and lower other revenue, which was partially offset by a better channel mix and lower inventory shrink (shoplifting).
Furthermore, Ulta returned over $267 million to shareholders via buybacks during the third quarter. The firm has regularly repurchased its shares in each of the most recent quarters (as demonstrated in the image below) and has $2.9 billion remaining under its buyback plan.
2024 Outlook
Looking ahead, Ulta expects FY 2024 earnings and revenues to be in the ranges of $23.20 to $23.75 per share and $11.1 billion to $11.2 billion, respectively. For reference, analysts were expecting $23.13 per share in earnings and revenue of $11.17 billion. Furthermore, it expects to repurchase a total of $1 billion worth of stock for the entire fiscal year.
As we can see, the company’s outlook is better than expected, which helped push shares higher in after-hours trading.
Is ULTA a Good Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ULTA stock based on 13 Buys, nine Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 20% drop in its share price over the past 12 months, the average ULTA price target of $404.83 per share implies 2.5% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
