Future returns remain investors’ primary concern. Nevertheless, taking a look at past stock returns can even impart wisdom. That is because it may possibly enable you see what the corporate did and didn’t accomplish, and the way the stock price reacted. It is also essential to match the return against an appropriate benchmark.
Turning to a well-recognized retail name, how much wealth has Ulta Beauty (NASDAQ: ULTA) created for shareholders over the past five years?
Five years ago, Ulta’s stock traded at about $267 a share and closed at over $415 on Jan. 8. That works out to a 57.6% appreciation. Your $5,000 investment would’ve grown to $7,878.Ulta Beauty’s stock doesn’t pay dividends, so that does not factor into the return.
That sounds impressive. But how would you’ve gotten done had you invested passively in an index just like the S&P 500? The index returned 95.5%, including dividends, during this time. Hence, your $5,000 investment would have grown to $9,776.
Ulta Beauty’s stock has slumped over the past yr. It was a quick grower, but sales have been sluggish these days. People have pulled back spending, since they’ve needed to pay more for basic items like food and rent.
Its fiscal third-quarter same-store sales (comps) increased just 0.6% within the period ended on Nov. 2, 2024. Many of the comps gain got here from increased traffic, showing shoppers are drawn to Ulta’s stores and website.
Ulta offers products like cosmetics, skincare, and fragrances at various price points. This could help the corporate until inflationary pressures ease and consumers looking for lower-priced items feel more comfortable spending money.
The stock trades at a price-to-earnings (P/E) ratio of 17, in comparison with about 20 a yr ago. That is much lower than the S&P 500’s P/E multiple of 30. With the stock down as a consequence of cyclical concerns, in five years long-term investors may look back and be pleased with the returns and wealth created.
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