Sally Beauty (SBH): Assessing Valuation as DoorDash Partnership Signals New Growth Strategies

Sally Beauty Holdings (NYSE:SBH) just teamed up with DoorDash for a multi-day “Beauty on the Go” pop-up experience in New York City, giving customers access to exclusive products, prizes, and limited-time deals. With beauty fans swarming for swag bags and on-demand delivery perks, investors are watching to see whether this modern approach to distribution can create new sales channels and reshape the company’s customer relationships. The move signals Sally Beauty’s renewed focus on reaching shoppers where they are: online, offline, and everywhere in between. This could have meaningful implications for future growth.

This headline-making collaboration comes at a time when Sally Beauty’s stock has been gaining momentum, with shares up around 15% over the past month and up nearly 18% in the past year. The company has faced some challenges along the way, including softer same-store sales and a smaller revenue base, but it has pushed ahead with new strategies targeting urban shoppers and product innovation. Investors have noticed the shift, with the stock currently trading close to its 52-week high and showing signs of renewed optimism from the market.

So, after this strong run and the latest push into omnichannel retail, is Sally Beauty Holdings still a value play, or is the market already looking ahead to even bigger gains?

Most Popular Narrative: 8% Overvalued

The most widely followed valuation narrative currently views Sally Beauty Holdings as slightly overvalued compared to its forecast fair value, with analysts projecting that the stock is priced about 8% above their derived target following recent guidance and performance updates.

Ongoing cost structure optimization through the Fuel for Growth program is delivering significant SG&A and gross margin savings. This enables both reinvestment in growth initiatives and direct improvement to net margins and earnings over the next several years.

Ready to see what’s truly powering this valuation? The experts reveal a blend of financial discipline and bold strategic bets. All of these are calculated to shift profit forecasts in surprising ways. Curious what assumptions are behind the latest fair value? You’ll want to dig into the projected growth rates and margin moves driving these numbers.

Result: Fair Value of $14.45 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, continued softness in certain categories and challenges adapting to fast-shifting digital preferences could quickly undermine the current optimism around Sally Beauty’s outlook.

Find out about the key risks to this Sally Beauty Holdings narrative.

Another View: What Does the SWS DCF Model Say?

Taking a different approach, our DCF model points to the stock being undervalued compared to its long-term cash flow outlook. This is in contrast to the overvalued signal from traditional analyst targets. What if the market is underestimating the company’s cash generation potential?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Sally Beauty Holdings to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Sally Beauty Holdings Narrative

Not convinced by these perspectives or want to dive deeper into the numbers yourself? You can quickly generate your own story using our platform. See how the data aligns with your view and Do it your way.

A great starting point for your Sally Beauty Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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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