NASDAQ constituent and specialty beauty store upstart Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) reports earnings Thursday night. But in front of the release, are there clues as to how investors will react in ULTA stock?
Let’s take a look at Ulta’s recent quarterly announcements, the ULTA stock chart and what, if anything, the options market is estimating in front of the earnings report.
ULTA Stock Earnings Picture
In front of Thursday night’s first-quarter earnings release, 22 analysts are forecasting profits of $1.29 per share. Analysts maintain a consensus buy rating on ULTA stock and earnings estimates range from $1.25 to $1.31 per share.
The Street’s current profit view compares to last year’s, same quarter result of $1.04 for bottom-line growth of 20%.
Sequential earnings from Q4 and the all-important holiday season are expected to fall from an upside surprise of $1.69 per share.
Full-year profit views are for ULTA stock to earn $5.98 in 2017 and grow profits by 20% over last year’s keep.
On the sales side, ULTA’s revenues are expected to increase to $1 billion versus last year’s result of $868 million. As with profits, sequential sales are forecast to drop by 23% from Q4’s $1.3 billion.
Full-year sales forecasts for ULTA stock call for revenues of $4.6 billion. The top-line result represents a 17.95% gain from 2016. Ulta Salon is also expected to grow sales by an additional 15% in 2018 to $5.3 billion
ULTA Stock Short-Term Trading Record
Since coming public, ULTA stock has established a strong pattern of beating Street profit views. Over the last couple years, the company has beaten Street profit views 91% of the time, or on 11 occasions, and missed just once.
In the immediate aftermath of reporting, ULTA stock has mostly reflected its earnings prowess and seen its share of powerful upside reactions by investors.
Working backwards, ULTA has moved 17.28%, 12.80%, -0.77%, -2.34%, 3.65% and 3.19% over the past several quarters.
The price moves in ULTA stock have produced an average and handsome gain of 5.63%, though one which comes with a larger 7.76% one standard deviation of risk.
Ulta Salon’s seven-period stock performance has resulted in ULTA rising by a similar 5.72% on average and slightly lower a one standard deviation reading of 6.57% over the last six quarterly reports.
ULTA Stock Daily Chart
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Despite the enviable increase in the price of ULTA stock, a couple volatile corrections along the way and a modest market cap just north of $13 billion suggests ULTA may not be finished putting the blush on investors. A bullish base currently under development certainly doesn’t hurt those chances.
Taking a closer look at ULTA’s daily chart, a seven-week-long high-and-tight formation popular with growth investors is setting up. This bullish pattern could act as a potential springboard for yet another of ULTA’s enthusiastic earnings-related price gaps.
ULTA Stock Options Pricing
While shares of ULTA have been quietly consolidating in recent weeks, options traders are quickly bidding up premiums well above current statistical volatility and back near previous pre-event levels in anticipation of a volatile earnings-related move.
As the closest-to-expiration options market, June is the purest play on ULTA’s earning’s event. With ULTA near $206, options traders are pricing in a 68% chance ULTA stock could trade as high as about $300 or as low as $113 over the next 26 days through June expiration.
The math behind the ULTA stock range calculation is based on the June $200 and $210 at-the-money straddle markets which are trading on implied volatility of around 45%.
Without the benefit of Weeklys, traders holding positions through expiration have greater levels of possible non-company specific risks to account for on top of earnings — and hence, the reason behind otherwise very rich premiums.
Investment accounts under Christopher Tyler’s management do not currently own positions in any of the securities or their derivatives mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT.
