Investors in Ulta Beauty (NASDAQ:ULTA) have seen respectable returns of 57% over the past three years | CPT PPP Coverage

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It hasn’t been the best quarter for Ulta Beauty, Inc. (NASDAQ:ULTA) shareholders, since the share price has fallen 20% in that time. But that shouldn’t obscure the pleasing returns achieved by shareholders over the last three years. After all, the share price is up a market-beating 57% in that time.

So let’s assess the underlying fundamentals over the last 3 years and see if they’ve moved in lock-step with shareholder returns.

See our latest analysis for Ulta Beauty

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During three years of share price growth, Ulta Beauty achieved compound earnings per share growth of 73% per year. The average annual share price increase of 16% is actually lower than the EPS growth. Therefore, it seems the market has moderated its expectations for growth, somewhat.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

We know that Ulta Beauty has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Ulta Beauty stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Ulta Beauty shareholders are down 3.8% for the year, but the market itself is up 21%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 7%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on Ulta Beauty it might be wise to click here to see if insiders have been buying or selling shares.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

What are the risks and opportunities for Ulta Beauty?

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.