On the four Ms, Ulta Beauty earns 100 for management and 82 for moat. The management score rests on a return on invested capital of 22.8% and a gross margin of 39.1% — figures that describe a business turning capital into profit efficiently. Debt sits at 0.78x equity.
Three independent anchors set the price worth paying. Growth is modelled at 15.0% a year, the rate measured from the filings. The exit multiple assumed is 25.2x. That produces an intrinsic value of $691.41, a 10-CAP price of $280.09 and a payback time price of $442.14, with the value zone set at the highest of the three, $442.14. Today's price of $537.73 sits 22% above it.
The operating figures describe a business performing at a high level; the price asks for that performance to continue and then some. A margin of safety score of 64 is the measure of how little room that leaves for being wrong.
| Price | $537.73 |
| Market cap | $23.1B |
| P/E ratio | 19.6x |
| Return on invested capital | 22.8% |
| Gross margin | 39.1% |
| Debt to equity | 0.78x |
| Free cash flow yield | 3.7% |
| Growth rate used | 15.0% |
| Growth rate measured | 15.0% |
| Exit multiple assumed | 25.2x |
| Company | Moat | Buy price |
| Casey's General Stores, Inc. (CASY) | 95 | $370.19 |
| Williams-Sonoma Inc. (WSM) | 59 | $119.90 |
| Tractor Supply (TSCO) | 77 | $13.09 |
| Five Below (FIVE) | 94 | $187.96 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Ulta Beauty rather than accepting ours.