Ulta Beauty ($ULTA): Waiting for Strategic Clarification

When I started to analyze Ulta Beauty (ULTA) my first feeling was “this is probably a great opportunity: a nice business with its stock trading down ~30% from its peak and at one of its lowest PE ratios over the last years (or even decades)”.

In other words, I thought this would be an easy buy and that the market was making a mistake. However, once again, the market quickly restored my humility, making me recall that it is almost always right.

After analyzing the Company I do believe that ULTA is a great company. I have little doubts about it. As we will see its evolution has been more than impressive as it has been its stock performance. I really think the Company will probably keep outperforming in the future. However, at the same time its growth is slowing and seems to be entering in a more mature phase, and the market is just reevaluating the multiples from a growing company to a maturing one. The company has unveiled many plans to keep growing, but most of them are in early stages …