When you buy a stock and hold it for the long term, you definitely hope for a positive return. But more than that, you want it to rise above the market average. However, Ulta Beauty, Inc. (NASDAQ:ULTA) stock is up 54% over five years, underperforming the market return and falling short of that second goal. Last year’s results were disappointing, with the share price down 2.3% during that time.
So let’s do some research and see if the company’s long-term performance is in line with the progress of its underlying business.
Check out our latest analysis for Ulta Beauty.
In his essay “Graham and Doddsville’s Super Investors,” Warren Buffett explained that stock prices do not always rationally reflect the value of a company. By comparing earnings per share (EPS) and share price changes over time, we can learn how investor attitudes to a company have changed over time.
Over five years, Ulta Beauty has been able to grow its earnings per share at 17% per year. This EPS growth is higher than the average annual increase in the share price of 9%. Therefore, we can conclude that the market as a whole is becoming more cautious towards stocks.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
NasdaqGS:ULTA Earnings Per Share Growth October 13, 2024
This free interactive report on Ulta Beauty’s earnings, revenue and cash flow is a great starting point, if you want to investigate the stock further.
different perspective
Investors in Ulta Beauty have had a rough year, with total losses of 2.3% versus a market gain of about 36%. Even blue-chip stocks can see their share prices drop from time to time, and we like to see improvement in a company’s fundamental metrics before we get too interested. On the bright side, long-term shareholders have made money, with a return of 9% per year over 50 years. The recent selloff could be an opportunity, so it might be worth checking the fundamental data for signs of a long-term growth trend. Before you invest more time in Ulta Beauty, it might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: Many of them are under the radar and have attractive reviews).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
