Sally Beauty Holdings Inc. (
While the most recent economic data and market action may not be
pretty, Sally Beauty Holdings managed to deliver some very
attractive results on May 3rd.
The global beauty supplier reported same store sales growth of
9.1% in Q2 2012 compared to 6% in the same quarter last year.
Net sales were up 10.9% to $889.3 million, which equated to Q2 net
earnings of $67.8 million or 35 cents per share, an increase of
34.6% compared to Q2 2011.
Sally finds itself in an unusual situation. They seem to
be the only bright light in a sector that has been struggling as of
late. Could it be that they have simply gotten lucky up until
now or are they really capturing that much business and executing
better than their peers?
Company Description & Financial Profile
Sally Beauty Holdings, Inc. is an international specialty retailer
and distributor of professional beauty supplies. Through the
Sally Beauty Supply and Beauty Systems Group businesses, SBH sells
and distributes more than 6,000 products for hair, skin, and nails
through professional lines such as Clairol, L'Oreal, Wella and
Conair, as well as an extensive selection of proprietary
Sally operates over 4,300 stores (including 200 franchised
units) throughout the U.S., U.K., Belgium, Chile, France, Canada,
Puerto Rico, Mexico, Ireland, Netherlands, Spain and Germany. Their
Beauty Systems Group is the largest full-service beauty supplier in
the world catering to professionals through a network of stores and
sales consultants. The Beauty Systems arm of SBH sells up to
9,800 professionally branded products including Paul Mitchell,
Wella, Sebastian, Goldwell, and TIGI which are targeted exclusively
for professional and salon use and resale to their customers.
SBH is mid-cap (4.95 billion) company with annual revenues of
roughly $3.3 billion. The stock is trading at 19.5 times
forward earnings with a PEG ratio of 1.21. This puts Sally
Beauty at a bit of a premium compared to the broad market, but
perhaps justified given its growth. SBH does not offer a dividend
at this time.
Sally became a Zacks Rank 1, Strong Buy on May 8th.
Earnings & Expectations
They reported a quarter over quarter sales increase of 3% at their
last earnings report, but managed to register a 21% EPS gain in the
same period. Their bottom line has topped analyst estimates for the
last four quarters, exceeding the Zacks Consensus EPS Estimate by
an average of 7.91% during that time.
SBH is expected to earn $1.36 in FY2012 and $1.59 in FY2013
according to the Zacks Consensus Estimate. Of the 8 analysts
who cover SBH, the consensus is for the company to see a 27.%
increase in EPS in the current year (FY2012) and grow earnings by
17% in FY2013.
In terms of the magnitude of analyst estimate trends, we are
seeing all of the consensus estimates higher than they were 7 days
ago for the current and next quarter as well as FY2012 and
FY2013. These upward revisions came in the wake of the strong
earnings and guidance gleaned from their recent report.
SBH is expected to earn 38 cents when they report on August 9th.
Market Performance & Technicals
SBH epitomizes the word momentum. What is most amazing about
this stock is the fact that it has continuously performed since
July of 2010. Even the downdrafts in August 2011 which sent
SBH below $15 still didn't push the stock below its 200 day moving
average, which now stands all the way down at $20.66
While the 20 day at $26.14 provides some support here, I would
look towards the 50 day average of $25.35 for a more viable support
SBH has exceeded the S&P 500's performance by a staggering
66% in the past year and almost 14% in the past 3 months.
Even with the recent pullback, Sally Beauty still leads the S&P
500 by almost 7% in the last 30 days alone. Even though
SBH has shown stunning performance for almost 2 years now, it is
susceptible to market corrections and will generally be more
volatile given its Beta of 1.67.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
SALLY BEAUTY CO (SBH): Free Stock Analysis
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