Ulta Beauty Debt
| ULTA Stock | USD 386.64 11.39 3.04% |
Ulta Beauty holds a debt-to-equity ratio of 1.049. At present, Ulta Beauty's Net Debt is projected to increase significantly based on the last few years of reporting. The current year's Debt To Equity is expected to grow to 0.43, whereas Short and Long Term Debt Total is forecasted to decline to about 1.2 B. With a high degree of financial leverage come high-interest payments, which usually reduce Ulta Beauty's Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
Ulta Beauty's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. Ulta Beauty's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps Ulta Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect Ulta Beauty's stakeholders.
For most companies, including Ulta Beauty, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for Ulta Beauty, the most critical issue when managing liquidity is ensuring that current assets are properly aligned with current liabilities. If they are not, Ulta Beauty's management will need to obtain alternative financing to ensure there are always enough cash equivalents on the balance sheet to meet obligations.
Price Book 7.5292 | Book Value 49.644 | Operating Margin 0.129 | Profit Margin 0.1068 | Return On Assets 0.1791 |
Ulta |
Ulta Beauty Bond Ratings
Ulta Beauty financial ratings play a critical role in determining how much Ulta Beauty have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for Ulta Beauty's borrowing costs.| Piotroski F Score | 5 | Healthy | View |
| Beneish M Score | (2.27) | Unlikely Manipulator | View |
Ulta Beauty Debt to Cash Allocation
As Ulta Beauty follows its natural business cycle, the capital allocation decisions will not magically go away. Ulta Beauty's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors.
Ulta Beauty currently holds 1.91 B in liabilities with Debt to Equity (D/E) ratio of 1.05, which is about average as compared to similar companies. Ulta Beauty has a current ratio of 1.6, which is within standard range for the sector. Note, when we think about Ulta Beauty's use of debt, we should always consider it together with its cash and equity.Ulta Beauty Total Assets Over Time
Ulta Beauty Assets Financed by Debt
The debt-to-assets ratio shows the degree to which Ulta Beauty uses debt to finance its assets. It includes both long-term and short-term borrowings maturing within one year. It also includes both tangible and intangible assets, such as goodwill.Ulta Beauty Debt Ratio | 19.0 |
Ulta Beauty Corporate Bonds Issued
Most Ulta bonds can be classified according to their maturity, which is the date when Ulta Beauty has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
Ulta Net Debt
Net Debt |
|
Understaning Ulta Beauty Use of Financial Leverage
Ulta Beauty's financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures Ulta Beauty's total debt position, including all outstanding debt obligations, and compares it with Ulta Beauty's equity. Financial leverage can amplify the potential profits to Ulta Beauty's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if Ulta Beauty is unable to cover its debt costs.
| Last Reported | Projected for Next Year | ||
| Net Debt | 1.1 B | 1.2 B | |
| Short and Long Term Debt Total | 1.9 B | 1.2 B | |
| Short Term Debt | 567.6 M | 448.6 M | |
| Net Debt To EBITDA | 0.59 | (0.72) | |
| Debt To Equity | 0.12 | 0.43 | |
| Interest Debt Per Share | 5.76 | 1.92 | |
| Debt To Assets | 0.05 | 0.19 | |
| Long Term Debt To Capitalization | 0.30 | 0.29 | |
| Total Debt To Capitalization | 0.11 | 0.30 | |
| Debt Equity Ratio | 0.12 | 0.43 | |
| Debt Ratio | 0.05 | 0.19 | |
| Cash Flow To Debt Ratio | 5.20 | 0.71 |
Also Currently Popular
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.When determining whether Ulta Beauty offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Ulta Beauty's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Ulta Beauty Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Ulta Beauty Stock:Check out the analysis of Ulta Beauty Fundamentals Over Time. For information on how to trade Ulta Stock refer to our How to Trade Ulta Stock guide.You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Is Other Specialty Retail space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Ulta Beauty. If investors know Ulta will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Ulta Beauty listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.12) | Earnings Share 24.92 | Revenue Per Share 234.543 | Quarterly Revenue Growth 0.009 | Return On Assets 0.1791 |
The market value of Ulta Beauty is measured differently than its book value, which is the value of Ulta that is recorded on the company's balance sheet. Investors also form their own opinion of Ulta Beauty's value that differs from its market value or its book value, called intrinsic value, which is Ulta Beauty's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Ulta Beauty's market value can be influenced by many factors that don't directly affect Ulta Beauty's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Ulta Beauty's value and its price as these two are different measures arrived at by different means. Investors typically determine if Ulta Beauty is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ulta Beauty's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.