Head to Head Survey: Ulta Beauty (NASDAQ:ULTA) versus Five Below (NASDAQ:FIVE)

Five Below (NASDAQ:FIVE) and Ulta Beauty (NASDAQ:ULTA) are both large-cap consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Five Below and Ulta Beauty, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Five Below	0	13	19	0	2.59
Ulta Beauty	0	8	23	1	2.78

Five Below presently has a consensus price target of $300.45, suggesting a potential upside of 25.03%. Ulta Beauty has a consensus price target of $635.87, suggesting a potential downside of 1.38%. Given Five Below’s higher possible upside, equities research analysts clearly believe Five Below is more favorable than Ulta Beauty.

Earnings & Valuation

This table compares Five Below and Ulta Beauty”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Five Below	$4.76 billion	2.78	$358.64 million	$11.14	21.57
Ulta Beauty	$12.96 billion	2.13	$1.15 billion	$27.44	23.50

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

Risk & Volatility

Five Below has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Ulta Beauty has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares Five Below and Ulta Beauty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Five Below	11.65%	22.13%	9.86%
Ulta Beauty	9.34%	45.40%	17.37%

Institutional & Insider Ownership

90.4% of Ulta Beauty shares are held by institutional investors. 1.0% of Five Below shares are held by insiders. Comparatively, 0.2% of Ulta Beauty shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Ulta Beauty beats Five Below on 10 of the 15 factors compared between the two stocks.

About Five Below

Five Below, Inc. operates as a specialty value retailer in the United States. The company offers range of accessories, which includes novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories, athletic tops and bottoms, and t-shirts, as well as nail polish, lip gloss, fragrance, and branded cosmetics; and personalized living space products, such as lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor, accent furniture, and related items, as well as provides storage options. It provides assortment of sports balls, team sports merchandise, and fitness accessories comprising hand weights, jump ropes, and gym balls; various games, such as board games, puzzles, collectibles, and toys, including remote control; and summer season sports, which includes pool, beach, and outdoor toys, as well as games and accessories. In addition, the company offers accessories for cell phones, tablets, audio, and computers, as well as cases, chargers, headphones, and other related items; and media products including books, video games, and DVDs. It also provides assortment of craft activity kits, and arts and crafts supplies, such as crayons, markers, and stickers; and school products comprising backpacks, fashion notebooks and journals, novelty pens and pencils, and locker accessories. Further, the company offers party products, which includes party goods, decorations, gag gifts, and greeting cards, as well as every day and special occasion merchandise; assortment of classic and novelty candy bars, movie-size box candy, seasonal-related candy, and gum and snack food products, as well as sells chilled drinks through coolers; and provides seasonally specific items used to celebrate and decorate for events. The company was formerly known as Cheap Holdings, Inc. and changed its name to Five Below, Inc. in August 2002. Five Below, Inc. was incorporated in 2002 and is headquartered in Philadelphia, Pennsylvania.

About Ulta Beauty

Ulta Beauty, Inc. operates as a specialty beauty retailer in the United States. The company offers branded and private label beauty products, including cosmetics, fragrance, haircare, skincare, bath and body products, professional hair products, and salon styling tools through its Ulta Beauty stores, shop-in-shops, Ulta.com website, and its mobile applications. It also offers beauty services, including hair, makeup, brow, and skin services at its stores. The company was formerly known as ULTA Salon, Cosmetics & Fragrance, Inc. and changed its name to Ulta Beauty, Inc. in January 2017. Ulta Beauty, Inc. was incorporated in 1990 and is based in Bolingbrook, Illinois.