Ulta Beauty

Methodology

Ulta Beauty's fair value calculation works well when the company is executing its store expansion and comparable store sales growth strategy, capturing the retailer's ability to deliver consistent earnings growth through market share gains. However, investors should normalize for competitive pressures from prestige beauty brands going direct-to-consumer and mass retailers upgrading beauty assortments. The method is most reliable when applied to normalized mid-cycle results rather than periods of unusual strength or weakness in discretionary beauty spending.

Methodology

Ulta typically trades at moderate to premium PEG ratios reflecting its position as the dominant beauty specialty retailer with unique mass-to-prestige product range and loyalty program advantages. The PEG framework works well for comparing Ulta to other specialty retailers, though investors should monitor for signs of market saturation or slowing comparable store sales growth. As store expansion decelerates, the PEG may compress unless the company sustains comps through e-commerce and services growth.

Methodology

Ulta pays no dividend, as management prioritizes reinvesting cash flow in store expansion, digital capabilities, and supply chain infrastructure to maintain competitive positioning. PEGY therefore equals PEG with no yield component, reflecting the company's growth-oriented capital allocation strategy. For Ulta investors, evaluating comparable store sales trends, market share in prestige beauty, and loyalty program engagement matters far more than dividend income.