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GuruFocus has detected 3 Warning Signs with Ulta Beauty Inc $ULTA.
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Ulta Beauty Inc (NAS:ULTA)
Retained Earnings
$906 Mil (As of Jan. 2017)

Retained earnings is the accumulated portion of net income that is not distributed to shareholders. Ulta Beauty Inc's retained earnings for the quarter that ended in Jan. 2017 was $906 Mil.

Ulta Beauty Inc's quarterly retained earnings increased from Jul. 2016 ($770 Mil) to Oct. 2016 ($813 Mil) and increased from Oct. 2016 ($813 Mil) to Jan. 2017 ($906 Mil).

Ulta Beauty Inc's annual retained earnings increased from Jan. 2015 ($680 Mil) to Jan. 2016 ($832 Mil) and increased from Jan. 2016 ($832 Mil) to Jan. 2017 ($906 Mil).


Definition

Retained Earnings is the accumulated portion of net income that is not distributed to shareholders. Because the net income was not distributed to shareholders, shareholders’ equity is increased by the same amount.

Of course, if a company loses, it is called retained losses, or accumulated losses.


Explanation

Historically profitable companies sometimes have negative retained earnings. This is because they have cumulatively paid out more to shareholders than they reported in profits.

For example, in 2011, Microsoft had negative retained earnings. This does not mean the company lost more money than it made over the years. It just means it paid out more money than it earned.

If a company has negative retained earnings, investors should check the 10-year financial results. They should not assume that negative retained earnings prove a company has generally lost money in the past.

Of course, many companies with negative retained earnings have indeed lost money in the past.

Retained Earnings: Warren Buffett’s Secret.

One of the most important indicators of durable competitive advantage. Net earnings can be paid out as dividends, used to buy back shares or retained for growth.

If the company loses more than it has accumulated, retained earnings is negative.

If a company isn’t adding to its retained earnings, it isn’t growing its net worth.

Rate of growth of retained earnings is good indicator whether it’s benefiting from a competitive advantage.

Microsoft is negative because it chose to buyback stock and pay dividends.

The more earnings retained, the faster it grows and increases growth rate for future earnings.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Ulta Beauty Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
Retained Earnings -69-44-567187297462680832906

Ulta Beauty Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
Retained Earnings 622680719747771832738770813906
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