(ULTA) Ulta Salon Cosmetics & Fragrance – Earnings Estimates Jump

March 31st, 2010

Ulta Salon Cosmetics & Fragrance (ULTA) is pressuring its 52-week high at $23.45 after reporting better than expected Q4 results in mid March that included a 13% earnings surprise.

Company Description

Ulta Salon, Cosmetics & Fragrance, Inc. operates as a retailer of prestige, mass and solon products in the united States. The company was founded in 1990, operates 346 stores in 36 states and has a market cap of $1.35 billion.

Fourth-Quarter Results

Shares of ULTA gapped open higher on March 11 after the company reported Q4 results that eclipsed expectations. Revenue for the quarter was up 16% from last year to $396.4 million. Earnings also came in strong at 34 cents, 13% ahead of the Zacks Consensus Estimate. The company has surprised in each of the last four quarters by an average of 4 cents, or 53%.

Ulta gained in a couple of key categories, with operating income up 60% to $34 million and same-store sales up 6.2%. Free cash flow was $105 million.

Looking forward Ulta is ready to capitalize on its upward momentum, with plans to open 46 stores, remodel 13 and relocate 6 in 2010.

Estimates Jump

Estimates have been on the rise for the last few months, with the current year adding 15 cents to 85 cents. The next-year estimate is up 23 cents to $1.04, a solid 22% growth projection.

Valuation

After a string of recent gains, this stock does look a bit pricey, trading with a forward P/E 27X, a premium to the overall markets.

The Chart

Shares of ULTA recently rebounded from a dip lower to a key trend line to pressure the 52-week high at $23.45. Look for support from the trend line if shares are repelled. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

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Read more on Ulta Salon C&F Inc, Cosmetics at Wikinvest

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