Ulta Beauty Had One Beautiful Quarter Ulta Beauty (NASDAQ: ULTA) highlights the dichotomy of mall-based retailers; either you have it or you don't. When it comes to what the public wants, the FQ1 results prove that...

Ulta Beauty Is One Mall Stock You Can Buy

Ulta Beauty (NASDAQ: ULTA) highlights the dichotomy of mall-based retailers; either you have it or you don't. When it comes to what the public wants, the FQ1 results prove that Ulta definitely has what the consumers want. The company's results were so far above the consensus as to be game-changing and that is seen in the analyst's activity as well. At least 6 of the analysts covering the stock have come out with commentary since the Q1 release and all of it is good. Among the 6 are 6 price target increases and 1 rating upgrade to Buy from Hold. The commentaries have the Marketbeat.com consensus rating edging up into firm Buy territory from weak Buy and the price target up in the 12, 3, and 1-month comparisons.

The Marketbeat.com consensus price target of $455 is about 7% above the recent price action and it is moving higher. The consensus of the 6 most recent commentaries is closer to $481 and 13.25% of upside for share prices. Based on the results, the guidance, and the analyst's activity to date we see the consensus target trending up toward the current high price target of $500 and then moving higher. And the institutions represented by the analysts? They've been net buyers for 12 of the last 13 quarters and own 90% of the company.

Ulta Beauty Strength Is More Than Skin Deep

Ulta Beauty had a great quarter bordering on an absolute blowout and the good news carries through every portion of the report. The company reported $2.34 billion in revenue for a gain of 20.6% over last year. The strength was driven by a better-than-expected comp-store figure that left the revenue more than 1000 basis points above the consensus figure. Comp-store sales are up 18% YOY on a 10% increase in tickets and a 7.3% increase in ticket average.

The company's revenue strength led to significant leverage and wider margins. The gross margin widened by 120 basis points, the operating margin by 290, to drive accelerated growth on the bottom line. The GAAP earnings of $6.30 are not only up $2.20 from last year but they beat the consensus by $1.82 or about 4000 basis points and there is more good news to come.

Turning to the guidance, the company is not only expecting to see revenue strength continue into the end of the year but for margin to remain favorable and for earnings strength as well. The new guidance for revenue assumes a range with $9.35 billion at the low end compared to the consensus figure of $9.16 and for the operating margin to widen. That combination should drive GAAP EPS of $19.20 to $20.10 which compares well to the then consensus of $19.00.

The Technical Outlook: Ulta Beauty Is On Track For A New All-Time High

Price action in Ulta Beauty surged in the wake of the Q1 results and looks ready to set a new all-time high. Not only is the price action already above an important resistance target but the indicators are bullish as well. Assuming that price action can get above the current all-time high we see it moving up to the $455 consensus price target at least.