Ulta Beauty, Inc. ULTA is likely to register top-line growth when it reports second-quarter fiscal 2024 earnings on Aug 29. The Zacks Consensus Estimate for revenues is pegged at $2.62 billion, suggesting an increase of 3.5% from the prior-year quarter’s reported figure.
However, the bottom line is likely to decline year over year. The consensus mark for quarterly earnings has dropped by 1 cent in the past 30 days to $5.49 per share. This indicates a decline of 8.8% from the year-ago quarter’s reported figure. Nonetheless, ULTA has a trailing four-quarter earnings surprise of 4.3%, on average.
Things to Consider About ULTA’s Upcoming Results
Ulta Beauty has been capitalizing on its strategic focus in five key areas — enhancing its product assortment, boosting social relevance, improving digital experiences, leveraging its top-tier loyalty program and refining promotional strategies. These efforts are likely to have driven comparable sales growth in the low single-digit range for first-half fiscal 2024, reflecting the positive impact of new sales initiatives and a strong product pipeline. Our projections indicate a 1.5% increase in comparable sales for second-quarter fiscal 2024.
Favorable trends in the beauty sector position Ulta Beauty well for the to-be-reported quarter. The company’s integration of mass, prestige and luxury brands into an engaging shopping experience is proving effective. ULTA’s robust operating model and strong brand partnerships are driving increased traffic in physical stores and digital channels.
Ulta Beauty Inc. Price and EPS Surprise
Ulta Beauty Inc. price-eps-surprise | Ulta Beauty Inc. Quote
However, the company faces a dynamic and challenging environment. Despite proactive measures, management expressed dissatisfaction with current market share trends. Additionally, intense competition within the beauty industry is adding further complexity to the situation.
Ulta Beauty expects SG&A deleverage in the fiscal 2024, thanks to sales-driving investments (including marketing and store labor), efforts related to the transformational agenda and initiatives to operationalize investments. Management expects SG&A expenses to increase by low-double-digit in the first half of fiscal 2024, raising concerns for the quarter under review. We expect an SG&A expense increase of 12.7% in the fiscal second quarter, with the rate likely expanding 210 basis points (bps) to 25.8%.
Also, management expects gross margin to deleverage in the first half of fiscal 2024. The downside was caused by soft merchandise margins and fixed cost deleverage. We expect a gross margin contraction of 20 bps in the fiscal second quarter.
Earnings Whispers for Ulta Beauty
Our proven model does not predict an earnings beat for Ulta Beauty this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
ULTA carries a Zacks Rank #3 and has an Earnings ESP of -1.97%.
Some Stocks With Favorable Combination
Here are some companies worth considering, as our model shows that these, too, have the correct combination to beat on earnings this time around.
American Eagle Outfitters AEO currently has an Earnings ESP of +1.97% and a Zacks Rank of 3. The company is likely to register bottom- and top-line growth when it reports second-quarter fiscal 2024 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.3 billion, indicating an 8.7% rise from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for AEO’s quarterly earnings has moved up a couple of cents in the past 30 days to 38 cents. The consensus estimate indicates growth of 52% from the year-ago quarter’s actual.
Costco Wholesale Corporation COST currently has an Earnings ESP of +0.89% and a Zacks Rank of 3. The company is expected to register top- and bottom-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COST’s quarterly revenues is pegged at $80.1 billion, suggesting growth of 1.4% from the year-ago quarter’s reported figure.
The consensus estimate for Costco’s earnings has remained unchanged in the past 30 days at $5.02. The consensus mark for earnings indicates growth of 3.3% from the year-ago quarter’s reported figure. COST delivered an earnings beat of 2.3%, on average, in the trailing four quarters.
Burlington Stores BURL has an Earnings ESP of +2.68% and a Zacks Rank of 3 at present. BURL is expected to register top- and bottom-line growth when it posts second-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for its quarterly earnings has increased by a penny in the past seven days to 95 cents. The consensus mark for earnings indicates a 58.3% surge from the figure reported in the year-ago quarter.
The consensus estimate for quarterly revenues is pegged at $2.42 billion, calling for a rise of 11.2% from the top line reported in the year-ago quarter. BURL delivered a trailing four-quarter average earnings surprise of 21.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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