Ulta Salon Cosmetics & Fragrance (ULTA) has a market cap of $5.8 billion with a price to earnings ratio of 49.24. The stock has traded in a 52-week range between $47.34 and $94.73. The stock is currently near the top of its 552 week range at trading around $94. The company reported fourth quarter revenues for the period ending on January 28, in the amount of $582 million compared to revenues of $473 million in the fourth quarter of 2011. Fourth quarter net income was $46 million compared to net income of $30 million in the fourth quarter of 2011.
One of Ulta’s competitors is Macy’s Inc. (M). Macy’s is currently trading around $40 with a market cap of $16.5 billion and a price to earnings ratio of 13.6. Macy’s pays a dividend which yields 2% versus Ulta which does not pay a dividend.
Ulta markets beauty supply products and provides beauty salon services. As of October 29, 2011, the company operated 442 retail stores in 42 states. The company has grown at a rapid rate and has increased revenues and net income in each of the last five years. The company increased year-over-year fourth quarter revenues by 23% and net income by 53%. In the March 8 fourth quarter earnings call the company’s CEO Chuck Rubin said that Ulta opened “seven stores in the quarter for a total of 61 new stores open in 2011. This represented a 16% net expansion in square footage in 2011, and resulted in a year end store count of 449.” The company to continue its expansion and has plans to open an additional 13 new stores in the first quarter of 2012. The company’s CFO Gregg Bodnar predicted said when predicting 2012 earnings that we “expect net income growth at the high end of our 25% to 30% growth target.” In spite of its rapid growth the company has a strong balance sheet with $253.7 million in cash and no debt. Ulta’s stock price increased by 95% over the last 52 weeks. Ulta’s future looks bright. Prospective investors should do further research.
Sally Beauty Holdings (SBH) has a market cap of $4.5 billion with a price to earnings ratio of 22.6. The stock has traded in a 52 week range between $13.15 and $25.63. The stock is currently trading around $24. The company reported first quarter revenues for the period ending on December 31 in the amount of $865 million compared to revenues of $793 million in the first quarter of 2011. First quarter net income was $30 million compared to net income of $41 million in the first quarter of 2011.
One of Sally Beauty’s competitors is CVS Caremark (CVS). CVS is currently trading around $45 with a market cap of $58.8 million and a price to earnings ratio of 17.5. CVS pays a dividend which yields 1.4% versus Sally Beauty which does not pay a dividend.
Sally, through its subsidiaries, sells beauty supplies to individuals and beauty salons. The company operates 4,128 company owned stores and has 181 franchised stores. The company increased year-over-year first quarter revenues by 9% but saw net income decrease by 36%. The company’s CEO Gary Winterhalter said that the decrease in net income was because of a one-time “aftertax charge of $25.6 million. This charge is due to the issuance of our new senior notes and the reduction of our 2014 senior and 2016 senior sub notes.” Sally Beauty needed to make this charge because the balance sheet shows $1.46 billion in debt. The good news is that the company’s year-over-year first quarter operating income increased by 22%. Sally Beauty has done a good job of growing revenues but needs to reduce its earnings reducing debt. Overall investors have been impressed by Sally Beauty’s growth and have bid the stock price up by 83% over the last 52 weeks. Prospective investors should do further research.
Regis (RGS) has a market cap of $1 billion with a negative price to earnings ratio. The stock has traded in a 52 week range between $12.46 and $19.20. The stock currently trades around $18. The company reported second quarter revenues for the period ending on the June 30 in the amount of $564 million compared to net income of $574 million in the second quarter of 2011. Second quarter net income was $-57 million compared to net income of $14 million in the second quarter of 2011.
One of Regis competitors is Walgreen (WAG). Walgreen is currently trading around $34 with a market cap of $29.3 billion and a price to earnings ratio of 11.3. Walgreens pays a dividend which yields 2.7% versus Regis whose dividend yields 1.3%.
Regis owns, and franchises hairstyling and hair care salons. In the second quarter the company’s year-over-year revenues decreased by $13 million and its net income decreased by $71 million. The company’s revenues have decreased in each of the last two quarters. In addition the company has had negative net income in three out of the last four quarters. As a result of the poor earnings the company’s stock is relatively cheap. The forward price to earnings ratio is 13.64 and the price to book ratio is 1.06. It would be normal to expect that the revenues of a salon based store would move higher as the economy improved. However Regis which operates brand names stores MasterCuts, SmartStyle and Supercuts is seeing reduced revenues. This is despite the fact that other companies in the beauty salon and supply sector have been increasing revenues, and have seen higher stock prices. Regis stock price has been flat over the last 52 weeks and last month. Prospective investors should do further research.
About the author:I am primarily an investor interested in creating passive income streams through dividends. I focus on finding and analyzing dividend paying stocks, MLPs and REITs that are a good fit for income investors.
I practice Judaism and my faith is very important to me. I visit family in Israel once a year, but I am educated and work in the United States where I hold an MBA and a bachelor’s in English. I am a patient man, enjoy wine but am not a connoisseur, and I listen more than I speak.