Ulta Beauty (WBO:ULTA) ROC % : 21.08% (As of Oct. 2024)

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What is Ulta Beauty ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Ulta Beauty's annualized return on capital (ROC %) for the quarter that ended in Oct. 2024 was 21.08%.

As of today (2024-12-11), Ulta Beauty's WACC % is 8.67%. Ulta Beauty's ROC % is 27.36% (calculated using TTM income statement data). Ulta Beauty generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.

Ulta Beauty ROC % Historical Data

The historical data trend for Ulta Beauty's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Ulta Beauty ROC % Chart

Ulta Beauty Annual Data

Trend

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

Jan24

ROC %

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24.73

7.64

31.07

36.29

33.48

Ulta Beauty Quarterly Data
	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21	Oct21	Jan22	Apr22	Jul22	Oct22	Jan23	Apr23	Jul23	Oct23	Jan24	Apr24	Jul24	Oct24
ROC %	Get a 7-Day Free Trial															24.12	36.61	30.39	23.27	21.08

Ulta Beauty ROC % Calculation

Ulta Beauty's annualized Return on Capital (ROC %) for the fiscal year that ended in Jan. 2024 is calculated as:

	ROC % (A: Jan. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2023 )	+	Invested Capital (A: Jan. 2024 ))	/ count )
=	1548.243 * ( 1 - 23.86% )	/	( (3367.46	+	3674.422)	/ 2 )
=	1178.8322202	/	3520.941
=	33.48 %

where

	Invested Capital		(A: Jan. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	4983.741	-	931.531	-	( 684.75	-	max(0, 1560.687	-	2514.234	+	684.75	))
=	3367.46

	Invested Capital		(A: Jan. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5239.036	-	860.881	-	( 703.733	-	max(0, 1522.219	-	2603.924	+	703.733	))
=	3674.422

Ulta Beauty's annualized Return on Capital (ROC %) for the quarter that ended in Oct. 2024 is calculated as:

	ROC % (Q: Oct. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jul. 2024 )	+	Invested Capital (Q: Oct. 2024 ))	/ count )
=	1187.468 * ( 1 - 24.36% )	/	( (4064.637	+	4455.992)	/ 2 )
=	898.2007952	/	4260.3145
=	21.08 %

where

	Invested Capital		(Q: Jul. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5289.89	-	843.58	-	( 381.673	-	max(0, 1467.118	-	2580.439	+	381.673	))
=	4064.637

	Invested Capital		(Q: Oct. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	5469.89	-	850.694	-	( 163.204	-	max(0, 1667.462	-	2712.563	+	163.204	))
=	4455.992

Note: The Operating Income data used here is four times the quarterly (Oct. 2024) data.

Ulta Beauty (WBO:ULTA) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Ulta Beauty's WACC % is 8.67%. Ulta Beauty's ROC % is 27.36% (calculated using TTM income statement data). Ulta Beauty generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

Ulta Beauty ROC % Related Terms

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Ulta Beauty Business Description

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Address

1000 Remington Boulevard, Suite 120, Bolingbrook, IL, USA, 60440

Website

https://www.ulta.com

With 1,385 stores at the end of fiscal 2023 and a partnership with Target, Ulta Beauty is the largest specialized beauty retailer in the US. The firm offers makeup (41% of 2023 sales), fragrances, skin care (19% of sales), and hair care products (19% of sales), and bath and body items. Ulta offers private-label products and more than 600 individual brands. It also offers salon services, including hair, makeup, skin, and brow services, in all stores. Most Ulta stores are approximately 10,000 square feet and are in suburban strip centers. Ulta was founded in 1990 and is based in Bolingbrook, Illinois.