Ulta Beauty Inc (ULTA)

Conclusion

Ulta Beauty Inc is a US specialty beauty retailer selling cosmetics, fragrance, haircare, skincare and salon products through stores, shop-in-shops, its website and its apps. The share price is 665.13 USD as of 2026-11-09, giving a market capitalisation of 28.44 billion USD.

The verdict is fair. The fair value band runs from 500.45 to 750.67 USD with a midpoint of 625.56 USD, and the margin of safety is -5.9% at the current price, which sits above that midpoint. The discounted cash flow value is 637.28 USD per share, and the fair value from historical multiples is 613.84 USD. The price-to-earnings ratio of 23.5x compares with a ten-year median of 21.7x, and EV/EBITDA of 15.8x compares with a median of 13.7x. The reverse DCF implies growth of 10.3% a year, against revenue growth of 15.0% a year over five years and free cash flow per share growth of 15.3% a year over the same period. Growth over three years is much slower, with revenue at 6.7% a year.

The strongest numbers are ROIC of 24.7% against a WACC of 8.7%, an Altman Z-score of 7.03, and free cash flow conversion of 88.2% over the trailing twelve months. The weakest are EPS growth of 2.2% a year over three years, an operating margin of 12.6% against a ten-year median of 13.8%, and a quick ratio of 0.20.

Financial health

The financial strength is green, supported by a net debt to EBITDA of 1.19x, interest coverage of 146.2x and a current ratio of 1.35. The quick ratio is only 0.20, and debt to equity is 0.95. The Altman Z-score is 7.03, inside the safe zone. The Altman model was designed for manufacturers, so its reading is only a rough guide for a retailer. Insolvency risk: low, about 0.5% by the estimate of the Ohlson model over one to two years. Debt has fallen by 12.2% a year over five years on the annual basis, which supports the balance sheet.

Earnings quality

The earnings quality is green. Free cash flow conversion is 88.2% on a trailing basis and 87.3% over five years. The accrual ratio is -5.4%, which means cash earnings run ahead of reported earnings. Stock-based compensation is only 0.4% of revenue, and free cash flow after it is 1.02 billion USD. The share count fell by 4.5% a year over five years, so buybacks are shrinking the number of shares. The Piotroski score is 5 out of 8 evaluable tests. The Beneish M-score value is not available. Ulta beat earnings estimates in seven of the last eight quarters, with an average surprise of 11.2%. Next-year estimates have been revised up by 13 analysts and down by 4 in the last 30 days.

Profitability

The profitability is yellow. The gross margin is 39.3% against a ten-year median of 37.5%, while the operating margin is 12.6% against a median of 13.8% and the net margin is 9.3% against a median of 9.7%. The operating margin has a stability reading of 21.9%. ROIC is 24.7% against a WACC of 8.7%, and the ROIC minus WACC value is 16.1%, so the business creates value. The five-year median ROIC is 33.2%. The return on equity of 45.8% is inflated by leverage: the DuPont split shows a net margin of 9.3%, an asset turnover of 1.77x and an equity multiplier of 2.50x.

Growth

The growth is green. Revenue has compounded at 6.7% a year over three years, 15.0% over five years and 12.2% over ten years. Revenue grew in nine of the ten comparable years. EPS compounded at 2.2% over three years, 52.5% over five years and 17.8% over ten years, so recent earnings growth has been much weaker than the five-year figure suggests. Free cash flow per share compounded at 1.6% over three years and 15.3% over five years. The consensus EPS growth for next year is 10.7%.

Valuation

The valuation is yellow, because the verdict is fair and the valuation signal is neutral. Current multiples sit above their ten-year medians on most measures: price-to-earnings at 23.5x against 21.7x, a premium of 8.4%; EV/EBITDA at 15.8x against 13.7x, a premium of 15.3%; price to free cash flow at 26.7x against 24.5x, a premium of 8.9%. Price to sales is at a discount of 8.3%, with 2.2x against a median of 2.4x. The discounted cash flow value is 637.28 USD per share at a discount rate of 9.1%, with 59.0% of it from the terminal value. The fair value is an estimate built on fixed assumptions, including a 5% equity risk premium and capped long-term growth, and is not a price target. The reverse DCF implies growth of 10.3% a year. Ulta pays no dividend.

Risks

A weaker operating margin would cut the free cash flow that supports the price. The current multiples already sit above their own history, so any slowdown in earnings growth, which was only 2.2% a year over three years, would leave less room under the fair value. A quick ratio of 0.20 means the company depends on inventory and ongoing trading to meet short-term obligations. A deterioration in the Beneish M-score is not visible here because its value is not available. The discounted cash flow value depends heavily on the terminal value, so small changes in the discount rate or long-term growth would move it considerably. This analysis has no debt maturity schedule and no revenue split by segment, so it cannot judge refinancing risk or which product lines drive growth.