What Do Analysts Think About Ulta Beauty, Inc.’s (NASDAQ:ULTA) Growth?

The latest earnings release Ulta Beauty, Inc.’s (NASDAQ:ULTA) announced in February 2019 confirmed that the business benefited from a robust tailwind, eventuating to a double-digit earnings growth of 19%. Investors may find it useful to understand how market analysts predict Ulta Beauty’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for Ulta Beauty

Analysts’ expectations for the coming year seems buoyant, with earnings increasing by a robust 13%. This growth seems to continue into the following year with rates arriving at double digit 27% compared to today’s earnings, and finally hitting US$930m by 2022.

NasdaqGS:ULTA Past and Future Earnings, April 14th 2019
NasdaqGS:ULTA Past and Future Earnings, April 14th 2019

Although it is helpful to understand the rate of growth each year relative to today’s figure, it may be more beneficial analyzing the rate at which the business is growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Ulta Beauty’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 10%. This means, we can presume Ulta Beauty will grow its earnings by 10% every year for the next couple of years.

Next Steps:

For Ulta Beauty, I’ve put together three key aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ULTA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ULTA is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ULTA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.