Analyzing Ulta Beauty (ULTA) and IAC (IAC)

Ulta Beauty (NASDAQ: ULTA) and IAC (NASDAQ:IAC) are both large-cap retail/wholesale companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Institutional and Insider Ownership

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92.0% of Ulta Beauty shares are owned by institutional investors. Comparatively, 86.9% of IAC shares are owned by institutional investors. 5.2% of Ulta Beauty shares are owned by company insiders. Comparatively, 10.6% of IAC shares are owned by company 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Ulta Beauty 9.44% 30.40% 18.17%
IAC 9.22% 2.42% 1.17%

Analyst Ratings

This is a summary of current recommendations for Ulta Beauty and IAC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ulta Beauty 0 10 14 0 2.58
IAC 0 2 17 0 2.89

Ulta Beauty presently has a consensus target price of $251.95, suggesting a potential upside of 20.98%. IAC has a consensus target price of $165.74, suggesting a potential upside of 10.32%. Given Ulta Beauty’s higher possible upside, research analysts clearly believe Ulta Beauty is more favorable than IAC.

Volatility and Risk

Ulta Beauty has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, IAC has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Valuation & Earnings

This table compares Ulta Beauty and IAC’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ulta Beauty $5.88 billion 2.15 $555.23 million $8.16 25.52
IAC $3.31 billion 3.75 $304.92 million $0.77 195.10

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

Summary

Ulta Beauty beats IAC on 8 of the 14 factors compared between the two stocks.

Ulta Beauty Company Profile

Ulta Beauty, Inc. operates as a beauty retailer in the United States. The company's stores provide cosmetics, fragrance, skincare, haircare, bath and body products, and salon styling tools, as well as others, including nail products and accessories. It offers private label products consisting of Ulta Beauty Collection branded cosmetics, skincare, and bath products. As of November 3, 2017, the company operated 1,010 retail stores. Its full-service salon offers hair, skin, and brow services; and provides products through its Website, ulta.com. 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 founded in 1990 and is based in Bolingbrook, Illinois.

IAC Company Profile

IAC/InterActiveCorp, together with its subsidiaries, operates as a media and Internet company in the United States and internationally. It operates through Match Group, ANGI Homeservices, Video, Applications, and Publishing segments. The Match Group segment provides subscription dating products, which enable users to establish a profile and review the profiles of other users in 42 languages. The ANGI Homeservices segment owns and operates the HomeAdvisor digital marketplace, which matches consumers with service professionals for home repair, maintenance, and improvement projects; and Angie's List that connects consumers with service professionals for local services through an online directory of service professionals in approximately 700 service categories, as well as provides consumers with tools, services, and content, including reviews of local service professionals. The Video segment operates a video sharing platform, which provides creators with professional tools to host, manage, review, distribute, and monetize videos online. It also offers creators with professional live streaming capabilities, as well as a live video solution; and creators with production hardware, tools, and services for capturing, broadcasting, and editing live events. The Applications segment develops, markets, and distributes various applications, primarily browser extensions. It also provides software and services that clean, repair, update, secure, and optimize computers, mobile phones, and digital devices; and customized browser-based search applications. The Publishing segment publishes digital content and/or offers search services. Its brands include Dotdash, Dictionary.com, Investopedia, The Daily Beast, Ask.com, and CityGrid. The company was formerly known as InterActiveCorp. IAC/InterActiveCorp was founded in 1986 and is headquartered in New York, New York.

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