Contrasting Ulta Beauty (ULTA) and e.l.f. Beauty (ELF)

Ulta Beauty (NASDAQ: ULTA) and e.l.f. Beauty (NYSE:ELF) are both retail/wholesale companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, earnings, dividends and risk.

Profitability

This table compares Ulta Beauty and e.l.f. Beauty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ulta Beauty 8.75% 28.91% 17.29%
e.l.f. Beauty 4.16% 10.54% 3.81%

Analyst Recommendations

This is a summary of current ratings for Ulta Beauty and e.l.f. Beauty, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ulta Beauty 0 10 12 0 2.55
e.l.f. Beauty 0 4 7 0 2.64

Ulta Beauty currently has a consensus price target of $320.06, suggesting a potential upside of 31.06%. e.l.f. Beauty has a consensus price target of $30.70, suggesting a potential upside of 33.42%. Given e.l.f. Beauty’s stronger consensus rating and higher probable upside, analysts clearly believe e.l.f. Beauty is more favorable than Ulta Beauty.

Insider & Institutional Ownership

85.7% of Ulta Beauty shares are held by institutional investors. Comparatively, 96.9% of e.l.f. Beauty shares are held by institutional investors. 5.2% of Ulta Beauty shares are held by insiders. Comparatively, 16.5% of e.l.f. Beauty shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Ulta Beauty and e.l.f. Beauty’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ulta Beauty $5.10 billion 2.97 $924.07 million $7.12 34.30
e.l.f. Beauty $249.18 million 4.26 $38.92 million $0.20 115.05

Ulta Beauty has higher revenue and earnings than e.l.f. Beauty. Ulta Beauty is trading at a lower price-to-earnings ratio than e.l.f. Beauty, indicating that it is currently the more affordable of the two stocks.

Summary

Ulta Beauty beats e.l.f. Beauty on 7 of the 12 factors compared between the two stocks.

Ulta Beauty Company Profile

Ulta Beauty, Inc. is a holding company for the Ulta Beauty group of companies. The Company is a beauty retailer. The Company offers cosmetics, fragrance, skin, hair care products and salon services. The Company offers approximately 20,000 products from over 500 beauty brands across all categories, including the Company’s own private label. The Company also offers a full-service salon in every store featuring hair, skin and brow services. The Company operates approximately 970 retail stores across over 48 states and the District of Columbia and also distributes its products through its Website, which includes a collection of tips, tutorials and social content. The Company offers makeup products, such as foundation, face powder, concealer, color correcting, face primer, blush, bronzer, contouring, highlighter, setting spray, shampoos, conditioners, hair styling products, hair styling tools and perfumes. The Company also offers makeup brushes and tools, and makeup bags and cases.

e.l.f. Beauty Company Profile

e.l.f. Beauty, Inc., formerly J.A. Cosmetics Holdings, Inc., is a cosmetic company. The Company conducts its business under the name e.l.f. Cosmetics, and offers products for eyes, lips and face to consumers through its retail customers, e.l.f. stores and e-commerce channels. The Company offers a range of products for eyes, such as eyeshadow, eyeliner, mascara and eyelashes, eyebrows, concealer and primer, brushes and tools, and sets and palettes. The Company offers lipstick, lip gloss, lipliner, and lip care and brushes. The Company launches its products on elfcosmetics.com, and distribution is generally only broadened to its retail customers after it receives consumer validation online. The Company sells its products in national and international retailers (with international primarily serviced by distributors) and direct-to-consumer channels. It sells its products in retail stores in the United States across mass, drug store, food and specialty retail channels.

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