ULTA — Ulta Beauty, Inc.

Sentiment turned constructive after the 2026-08-27 Q2 FY2026 print: net sales rose 8.9% y/y to $3.04B with comparable sales +3.8% and diluted EPS of ~$6.55-6.57 versus consensus of $6.21-$6.25. Management raised FY2026 guidance (sales +6.7-7.2%, comps +3.2-3.7%, EPS $28.70-$29.00, up from $28.36-$28.80) and firms adjusted targets higher (DA Davidson to $625/Buy; BMO initiated at Market Perform, $580). With 81% of covering analysts at Buy/Strong Buy and a consensus target of $632.07 (~16% above the 2026-09-13 price), the posture is bullish — but not euphoric: the 6-month return was only +2.06% and the 1-week return -3.07%, and the stock remained below its 200-day average, so the market is rewarding execution without yet re-rating the multiple.

The three-year quarterly record shows a clear trough-then-reacceleration in revenue. YoY revenue growth went from +1.66% (quarter ended 2024-11-02) and -1.88% (2025-02-01) to +4.49% (2025-05-03), then jumped to +9.26% (2025-08-02), +12.95% (2025-11-01), +11.78% (2026-01-31) and +11.08% (2026-05-02), before easing to +8.86% in the quarter ended 2026-08-01. That latest quarter is the key nuance: reported revenue of $3.036B grew 8.9% while comps grew only 3.8%, meaning roughly 5 points came from new stores and non-comp/international revenue such as Space NK rather than the core. Gross margin is genuinely stable, holding in a 38.1-40.4% range across all twelve quarters with no directional drift. Operating margin is where the story turned: it ran 12.78% (Nov-2024) and 14.85% (Feb-2025), then reset to 11.01% (Nov-2025) and 12.33% (Jan-2026) — a 177bp and 252bp YoY compression respectively — before stabilizing at 14.17% (May-2026, exactly flat YoY) and 12.66% (Aug-2026, +11bp YoY). The EPS path reflects that: the quarter ended 2026-01-31 earned $8.02 versus $8.46 a year earlier (-5.2%) and the quarter ended 2025-11-01 was flat at $5.14, but the last two quarters inflected to +15.5% (May-2026, $7.74) and +13.7% (Aug-2026, $6.57), helped by the 1.4M shares ($791.1M) repurchased in H1. This is a margin reset that has stabilized and an earnings line now inflecting up, not a structural downtrend — but the gap between 8.9% reported growth and 3.8% comps is the single most important thing to watch.

Fair, leaning modestly cheap against its own history rather than against the market. As of 2026-09-13 the stock carried a TTM P/E of 19.85x and a forward P/E of ~18.9x on the ~$29.0 consensus EPS, both below the 20.29x five-year average P/E. Price-to-sales of 1.81x compares to a 2.22x five-year average — roughly 18% below its own norm. The reported PEG of 3.79 looks alarming but is an artifact of whatever long-run growth estimate is plugged in; against the ~12-13% EPS growth implied by FY2026 guidance of $28.70-$29.00 versus FY2025's ~$25.64, the near-term PEG is closer to 1.5x, which is unremarkable for a retailer with 22.8% ROIC, a 39.3% gross margin, zero long-term debt and ~$1.07B of trailing free cash flow (a ~4.5% FCF yield). EV/EBITDA of 13.5x, price-to-book of 9.0x and price-to-cash of 111x are the screens that look stretched, but book value and cash are both artificially depressed by years of buybacks and a negative-working-capital model. Net: you are paying a market-like multiple for a better-than-market business — fair, not a bargain.

At $546.78 on 2026-09-13, the stock is capitalizing about $29 of forward EPS at ~18.9x against a 20.3x five-year average, so the market is pricing mid-single-digit comps plus continued buyback-driven EPS growth of roughly 12%, and essentially no multiple expansion. That sets up an asymmetric read on the 2026-12-03 Q3 print: if holiday comps land at or above the high end of the guided +3.2-3.7% range and management raises again, a re-rate back toward the 20.3x average on $30+ of forward EPS points to $605-620 without heroic assumptions. If comps fall below ~3% or the Nov-2025/Jan-2026 margin reset repeats in Q4, the multiple compresses toward 16-17x and $480-510 becomes the gravity point. The buyback is the swing factor in earnings optics: ~$1.0B of remaining authorization to be exhausted by the end of FY2026 is roughly 4% of market cap and mechanically lifts EPS even if the top line merely holds guidance.

As of 2026-09-13, ULTA's RSI(14) stood at 55.3 — neutral, neither overbought nor oversold. The price was 2.29% above its 20-day SMA (~$534.5 implied) and 6.78% above its 50-day SMA (~$512.1), but still 1.85% below its 200-day SMA (~$557), which is the honest tell: this is a stock recovering from a downtrend, not yet in a confirmed long-term uptrend. The 1-week return of -3.07% is a pullback within a 3-month gain of +16.9%, while the 6-month return of only +2.06% shows how much of that gain merely retraced earlier losses. Entry implication: there is no oversold setup to exploit at 55.3 RSI — the cleaner setups are either a pullback toward the ~$512 50-day or a decisive close back above ~$557 that flips the 200-day from resistance to support.

• Resilient beauty demand — the 'lipstick effect' and secular spend on wellness, self-care and prestige fragrance continue to support specialty beauty even as broader discretionary retail softens, and ULTA's sub-1.0 beta (0.854) reflects that relative defensiveness.
• Input and operating cost inflation — wage pressure, supply-chain overhead and retail rent inflation are the vectors behind the operating margin reset to 11.01% (Nov-2025) and 12.33% (Jan-2026), and management must keep offsetting them through efficiency and cost discipline.
• Tariffs and imported-goods costs — a large share of beauty and packaging is imported, so tariff changes flow straight into gross margin, which has been held remarkably stable in a 38-40% band and would be the first line to break.
• Competitive intensity — Sephora (including its Kohl's shop-in-shops), Amazon, department stores and digital-native brands are all fighting for the same category dollar, making the Ultamate Beauty Rewards loyalty base the real economic moat.
• Rates and consumer credit — with discretionary retail multiples rate-sensitive and the stock still trading below its 200-day average, a higher-for-longer backdrop caps multiple expansion even on good earnings.

• Q3 FY2026 earnings on 2026-12-03 — the holiday read-through, comp trajectory versus the guided +3.2-3.7%, and whether management raises FY2026 guidance a second time.
• Completion of the remaining ~$1.0B share repurchase authorization by the end of FY2026 (~4% of market cap at the 2026-09-13 price), a mechanical EPS tailwind.
• Space NK integration and international/partnered-door expansion (e.g. The Potion Studio rolling into 450+ doors), which is a real revenue contributor but also the main source of the gap between reported growth and comps.
• Gross-margin trajectory — evidence that tariff and promotional pressure is easing would validate the stabilization already seen in the two most recent quarters.
• A decisive reclaim of the ~$557 200-day moving average, which would likely pull momentum buyers back in after a 6-month return of just +2.06%.

• Growth quality — reported revenue growth of 8.9% in the quarter ended 2026-08-01 against comps of only +3.8% means roughly 5 points came from new stores and non-comp/international revenue; if Space NK or new-store contribution fades, the headline growth rate decelerates quickly.
• Margin durability — the YoY operating margin drops of 177bp (Nov-2025) and 252bp (Jan-2026) have only two quarters of stabilization behind them, and the Q4 holiday quarter is the highest-margin, highest-stakes test.
• Competitive share loss and promotional intensity — a category this attractive invites price competition, and Ulta's 39.3% gross margin is the cushion that would absorb it.
• Capital allocation at a high price — 1.4M shares repurchased for $791.1M in H1 implies an average near $565, above the 2026-09-13 price; if comps stall, that spend destroys value rather than creating it, and it has already pushed book value to a thin $2.64B against a 0.29 quick ratio.
• Execution and FX risk on the international build-out, plus the reality that the balance sheet's $4.32B of liabilities against $2.64B of equity (D/E 0.955, though long-term debt is $0 and the bulk is lease obligations) leaves less room for error than the debt-free headline suggests.

ULTA is a genuinely good business offered at a fair, not compelling, price: 22.8% ROIC, zero funded debt, a stable 39%+ gross margin, ~$1.07B of trailing free cash flow (a ~4.5% FCF yield) and ~19x forward earnings against a 20.3x five-year average, with comps back to +3.8%, FY2026 guidance raised on 2026-08-27 and ~$1B of buyback still to be retired. The honest caveats are that reported growth is running about double the comp rate because of new stores and Space NK, operating margin reset 180-250bp lower in the Nov-2025 and Jan-2026 quarters before stabilizing, and the shares are still below their 200-day average with a 6-month return of just +2%. I would lean mildly constructive rather than aggressive — add toward the ~$512 50-day rather than chase at $546.78, and treat a clean reclaim of ~$557 as confirmation that the margin and comp story is actually holding.

Applied ~19.5x to a forward-12-month EPS of ~$30.00 (blending the FY2026 guidance midpoint of $28.85 with a high-single-digit FY2027 step-up to ~$31.50) — a slight discount to ULTA's 20.29x five-year average P/E to reflect decelerating comps and the recent margin reset — giving $585, and cross-checked it against a 4.25% required FCF yield on trailing-twelve-month free cash flow of $1,067M, which produces a $25.1B equity value, or ~$584 on the 42.99M shares implied by the 2026-09-13 market cap and price. Both methods converge at roughly $585, which sits below the $632.07 analyst consensus target and above the $550 low target.