The Ulta Beauty story

What drives the business

• Ulta built its US business by combining mass, prestige and professional beauty products with salon services, offering approximately 30,000 products from approximately 600 brands.
• Its loyalty program had more than 46 million members at the end of fiscal 2025 and accounted for approximately 95% of Ulta U.S. sales, giving the retailer a broad base for personalized promotions and repeat visits.
• Physical stores remain central to that model, with 73% of Ulta U.S. loyalty members transacting solely in stores in fiscal 2025, while the company-operated network reached 1,622 stores after 15 openings in the quarter to August 2026.
• Brand relationships also define the business, with the top ten partners, including L’Oréal and Estée Lauder Companies, accounting for approximately 51% of Ulta U.S. net sales in fiscal 2025.
• The Ulta Beauty Unleashed strategy extends beyond the US core through Space NK in the UK and Ireland, a Mexico joint venture with Grupo Axo and a Middle East franchise with Alshaya Group, alongside the commission-based UB Marketplace and advertising business UB Media.

What the price assumes

At $549.13, the reverse DCF implies free cash flow after stock pay growing 8.7% a year for ten years, using a 10.2% discount rate.

Ulta delivered 26.6% annual growth in that measure over the last 10 years, while the TenQ check sets a 15.3% bar by slowing that record halfway toward 4%.

The implied pace is below both comparisons, but sustaining cash growth remains a separate test from the 11.2% revenue growth delivered over the last twelve months.

Value ULTA on your own assumptions

What could change the story

• Space NK adds revenue but changes the profit mix, as shown by the gross margin decline to 39.1% in the quarter to August 2026.
• The longer profit record is weaker than the sales record, with annual profit growth of -2.4% over the last three years and profit growth of 0.7% over the last twelve months.
• Near-term liquidity falls short of the TenQ check, with a ratio of 1.35 against its 1.50 bar, while cash and short-term investments of $213 million sit below total debt of $340 million.
• Cash returned to shareholders amounted to 111.2% of free cash flow, and short-term debt of $339.6 million at August 1, 2026 supported working capital and capital allocation priorities, including repurchases.
• Dependence on major brand partners makes assortment and brand relationships important to maintaining customer visits, while new US stores require an average investment of approximately $2.4 million.

What to watch next

• Ulta’s raised fiscal 2026 outlook calls for net sales growth of 6.7% to 7.2% and comparable sales growth of 3.2% to 3.7%, making comparable sales the clearest measure of demand beyond acquisitions and store additions.
• Operating income growth guidance of 8.3% to 9.3% and diluted earnings per share guidance of $28.70 to $29.00 put attention on whether expense control continues to offset pressure on gross margin.
• Free cash flow, short-term debt and cash balances will show how Ulta funds its planned use of the remaining $1.0 billion repurchase authorization by the end of fiscal 2026 alongside capital expenditure guidance of $400 million to $450 million.

Sources

• Ulta Beauty's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The ULTA stock report, for every figure and check