After walking into the ULTA with my girlfriend yesterday, I was blown away at the operation they have going on there. There was a lot of people and I saw it as a possible investing opportunity. So, I went home and looked up the financials.
First off I am always a little standoffish about retial stores. And although they have an online presence, they are moslty situated in shopping malls and centers. So that always makes me a little worrisome. Now, if they partnered with Amazon, could be a whole different story.
Ulta is interesting because they have signs of, from what I can see, great capital allocation. Large ROE, No dividend (which acceptable with consistanly large ROEs), and No Debt!
But they do have the margins of a retial store. The gross margins are below 40%, which is the level I like to see. And their net margins are below 10%.
Overall, I like what they are doing capital wise but the margins and the over looming storm cloud of the retial bug will keep me away for now.
How about you?
Submitted June 10, 2018 at 11:15AM by sisumoney https://ift.tt/2JDRFkz
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