Is It Too Late To Consider Ulta Beauty After Its Strong 2025 Share Price Rally?

• If you are wondering whether Ulta Beauty is still attractive after such a strong run, or if the best days are already priced in, this article will walk through what the numbers say about its value.
• The stock has quietly climbed to around $548, up 2.4% over the last week, 5.9% over the past month, and 27.7% year to date, adding to a 37.1% gain over the last year and 98.8% over five years.
• Recent headlines have focused on Ulta's ongoing store expansion, growing partnerships with major beauty brands, and its push into prestige and exclusive product lines. These trends reinforce its position as a category leader. At the same time, investors are watching how Ulta navigates shifting consumer spending and competitive pressures in beauty and specialty retail.
• Despite that backdrop, Ulta Beauty only scores 1 out of 6 on our valuation checks, suggesting the market might already be baking in a lot of optimism. We will unpack what traditional valuation methods say next, and then finish by looking at a more holistic way to think about its worth.

Ulta Beauty scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Ulta Beauty Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and then discounting them back to today, using a required rate of return. In Ulta Beauty’s case, the 2 Stage Free Cash Flow to Equity model starts from last year’s free cash flow of about $895.8 million and projects modest growth over time.

Analyst estimates point to free cash flow of roughly $894.97 million in 2026 and $961.6 million in 2027, with later years extrapolated by Simply Wall St rather than directly forecast by analysts. By 2035, free cash flow is projected to be around $1.12 billion, all in dollars and then discounted back to present value to reflect risk and the time value of money.

Based on these cash flows, the model arrives at an intrinsic value of about $361.26 per share. This suggests Ulta is around 51.7% overvalued relative to the current price near $548.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Ulta Beauty may be overvalued by 51.7%. Discover 927 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ulta Beauty.

Approach 2: Ulta Beauty Price vs Earnings

For a profitable, mature business like Ulta Beauty, the price to earnings (PE) ratio is a useful way to judge value because it links what investors pay today to the company’s actual earnings power. In general, faster expected growth and lower perceived risk justify a higher PE, while slower growth or higher risk call for a lower, more conservative multiple.

Ulta currently trades on about 20.45x earnings, which is slightly above the Specialty Retail industry average of around 17.88x but well below the broader peer group average near 41.46x. Simply Wall St’s proprietary Fair Ratio framework goes a step further by estimating what PE Ulta could trade on, given its specific mix of earnings growth, profitability, industry, market cap, and risk profile. For Ulta, that Fair Ratio is 17.07x, indicating that investors are paying more than this fundamentals-based benchmark.

Because Ulta’s actual PE of 20.45x stands meaningfully above the Fair Ratio of 17.07x, this multiple-based view suggests that the shares are on the expensive side rather than a bargain.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Ulta Beauty Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply the stories investors tell about a company’s future and then translate into numbers like revenue, earnings, margins, and a fair value estimate. A Narrative connects three pieces together: the business story, a concrete financial forecast, and the resulting fair value. It is built in an easy, accessible workflow on Simply Wall St’s Community page, which is used by millions of investors. By comparing the Fair Value from your Narrative to today’s Price, you can turn your view of Ulta into a decision about whether it looks like a buy, hold, or sell for you, and your Narrative will automatically update as new earnings, news, or guidance come in. For example, one Ulta Narrative might lean bullish and land near $680 per share because it expects wellness expansion, digital investments, and international growth to be reflected in its earnings and justify a higher future PE. A more cautious Narrative might sit closer to $405 if it assumes rising costs, partnership risks, and tougher competition will weigh on margins and limit upside.

Do you think there's more to the story for Ulta Beauty? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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