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Why Ulta Beauty Stock Rose 6.4% on Friday

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Sep. 4 2018, Published 8:07 a.m. ET

Stock up on Friday

After falling 4.7% in after-hours trading on August 30, Ulta Beauty (ULTA) stock surged 6.4% on August 31. The stock declined in the after-market hours on August 30 in reaction to the weak earnings forecast for the third quarter of fiscal 2018 despite the company beating analysts’ expectations for the fiscal second quarter. The rise in Ulta Beauty’s stock price on August 31 came after the company announced its partnership with Kylie Cosmetics.

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In its second-quarter conference call, Ulta Beauty CEO Mary Dillon mentioned that the company would be offering Kylie Cosmetics in all stores and online by the holiday season. Kylie Cosmetics is a brand owned by Kylie Jenner, a very popular television personality and model. Kylie Jenner has quite an influence in the beauty space and has a strong social media following.

Guidance shadowed Q2 performance

Ulta Beauty exceeded analysts’ sales as well as earnings expectations for the second quarter of fiscal 2018, which ended on August 4. The company delivered sales growth of 15.4% and adjusted EPS growth of 34.4% in the fiscal second quarter. However, the company’s fiscal third-quarter earnings guidance lagged analysts’ expectations. We’ll discuss the company’s earnings in part two of this series.

Ulta Beauty stock has risen 16.2% on a YTD (year-to-date) basis as of August 31 and is currently ahead of the S&P 500, which is up 8.5%.

Series overview

In this series on Ulta Beauty, we’ll discuss in detail the company’s fiscal second-quarter sales, earnings, and margins. In part five of this series, we’ll look at the company’s valuation and analysts’ reaction to the fiscal second-quarter performance.

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