Stock Analysis on Net

Ulta Beauty Inc. (NASDAQ:ULTA)

This company has been moved to the archive! The financial data has not been updated since August 24, 2023.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Ulta Beauty Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Net operating profit after taxes (NOPAT)1 1,347,343 1,087,749 242,025 813,424 777,837 527,431
Cost of capital2 15.45% 15.27% 15.05% 14.24% 14.75% 13.90%
Invested capital3 4,117,969 3,684,509 4,184,136 3,966,351 4,338,625 3,940,229
 
Economic profit4 711,011 524,962 (387,557) 248,773 137,679 (20,218)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,347,34315.45% × 4,117,969 = 711,011

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Ulta Beauty Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Net Operating Profit after Taxes (NOPAT)

Ulta Beauty Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Net income 1,242,408 985,837 175,835 705,945 658,559 555,234
Deferred income tax expense (benefit)1 15,654 (25,666) (24,008) 5,503 34,080 (27,095)
Increase (decrease) in allowance for doubtful accounts2 71 237 (595) 712 (720) (708)
Increase (decrease) in deferred revenue3 41,098 79,196 36,848 38,481 85,918
Increase (decrease) in equity equivalents4 56,823 53,767 12,245 44,696 119,278 (27,803)
Interest expense
Interest expense, operating lease liability5 60,902 60,943 68,285 79,472
Adjusted interest expense 60,902 60,943 68,285 79,472
Tax benefit of interest expense6 (12,789) (12,798) (14,340) (16,689)
Adjusted interest expense, after taxes7 48,112 48,145 53,945 62,783
Net operating profit after taxes (NOPAT) 1,347,343 1,087,749 242,025 813,424 777,837 527,431

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net income.

5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,903,176 × 3.20% = 60,902

6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 60,902 × 21.00% = 12,789

7 Addition of after taxes interest expense to net income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Ulta Beauty Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Cash Operating Taxes

Ulta Beauty Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Provision for income taxes 401,136 309,992 55,250 200,205 200,582 231,625
Less: Deferred income tax expense (benefit) 15,654 (25,666) (24,008) 5,503 34,080 (27,095)
Add: Tax savings from interest expense 12,789 12,798 14,340 16,689
Cash operating taxes 398,271 348,456 93,598 211,391 166,502 258,720

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Ulta Beauty Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Invested Capital

Ulta Beauty Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Operating lease liability1 1,903,176 1,846,756 1,896,801 1,938,347 2,285,412 2,234,521
Total reported debt & leases 1,903,176 1,846,756 1,896,801 1,938,347 2,285,412 2,234,521
Stockholders’ equity 1,959,811 1,535,373 1,999,549 1,902,094 1,820,218 1,774,217
Net deferred tax (assets) liabilities2 55,346 39,693 65,359 89,367 83,864 59,403
Allowance for doubtful accounts3 1,076 1,005 768 1,363 651 1,371
Deferred revenue4 394,677 353,579 274,383 237,535 199,054 113,136
Equity equivalents5 451,099 394,277 340,510 328,265 283,569 173,910
Accumulated other comprehensive (income) loss, net of tax6 (56)
Adjusted stockholders’ equity 2,410,910 1,929,650 2,340,003 2,230,359 2,103,787 1,948,127
Construction-in-progress7 (196,117) (91,897) (52,668) (92,355) (50,574) (122,419)
Short-term investments8 (110,000) (120,000)
Invested capital 4,117,969 3,684,509 4,184,136 3,966,351 4,338,625 3,940,229

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of construction-in-progress.

8 Subtraction of short-term investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Ulta Beauty Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Cost of Capital

Ulta Beauty Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 25,799,272 25,799,272 ÷ 27,702,448 = 0.93 0.93 × 16.41% = 15.28%
Operating lease liability3 1,903,176 1,903,176 ÷ 27,702,448 = 0.07 0.07 × 3.20% × (1 – 21.00%) = 0.17%
Total: 27,702,448 1.00 15.45%

Based on: 10-K (reporting date: 2023-01-28).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 20,672,932 20,672,932 ÷ 22,519,688 = 0.92 0.92 × 16.41% = 15.06%
Operating lease liability3 1,846,756 1,846,756 ÷ 22,519,688 = 0.08 0.08 × 3.30% × (1 – 21.00%) = 0.21%
Total: 22,519,688 1.00 15.27%

Based on: 10-K (reporting date: 2022-01-29).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 17,030,294 17,030,294 ÷ 18,927,095 = 0.90 0.90 × 16.41% = 14.76%
Operating lease liability3 1,896,801 1,896,801 ÷ 18,927,095 = 0.10 0.10 × 3.60% × (1 – 21.00%) = 0.29%
Total: 18,927,095 1.00 15.05%

Based on: 10-K (reporting date: 2021-01-30).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 9,823,188 9,823,188 ÷ 11,761,535 = 0.84 0.84 × 16.41% = 13.70%
Operating lease liability3 1,938,347 1,938,347 ÷ 11,761,535 = 0.16 0.16 × 4.10% × (1 – 21.00%) = 0.53%
Total: 11,761,535 1.00 14.24%

Based on: 10-K (reporting date: 2020-02-01).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 20,422,540 20,422,540 ÷ 22,707,952 = 0.90 0.90 × 16.41% = 14.75%
Operating lease liability3 2,285,412 2,285,412 ÷ 22,707,952 = 0.10 0.10 × 0.00% × (1 – 21.00%) = 0.00%
Total: 22,707,952 1.00 14.75%

Based on: 10-K (reporting date: 2019-02-02).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 12,387,744 12,387,744 ÷ 14,622,265 = 0.85 0.85 × 16.41% = 13.90%
Operating lease liability3 2,234,521 2,234,521 ÷ 14,622,265 = 0.15 0.15 × 0.00% × (1 – 33.70%) = 0.00%
Total: 14,622,265 1.00 13.90%

Based on: 10-K (reporting date: 2018-02-03).

1 US$ in thousands

2 Equity. See details »

3 Operating lease liability. See details »


Economic Spread Ratio

Ulta Beauty Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 711,011 524,962 (387,557) 248,773 137,679 (20,218)
Invested capital2 4,117,969 3,684,509 4,184,136 3,966,351 4,338,625 3,940,229
Performance Ratio
Economic spread ratio3 17.27% 14.25% -9.26% 6.27% 3.17% -0.51%
Benchmarks
Economic Spread Ratio, Competitors4
Amazon.com Inc. -4.37% -15.63% 4.44% 1.80% -1.54%
Home Depot Inc. 20.90% 25.39% 16.22% 23.31% 23.74%
Lowe’s Cos. Inc. 16.40% 24.62% 12.11% 8.23% -1.30%
TJX Cos. Inc. 7.38% 7.32% -9.61% 8.10% 7.37%

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 711,011 ÷ 4,117,969 = 17.27%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Ulta Beauty Inc. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

Economic Profit Margin

Ulta Beauty Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Jan 28, 2023 Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 711,011 524,962 (387,557) 248,773 137,679 (20,218)
 
Net sales 10,208,580 8,630,889 6,151,953 7,398,068 6,716,615 5,884,506
Add: Increase (decrease) in deferred revenue 41,098 79,196 36,848 38,481 85,918
Adjusted net sales 10,249,678 8,710,085 6,188,801 7,436,549 6,802,533 5,884,506
Performance Ratio
Economic profit margin2 6.94% 6.03% -6.26% 3.35% 2.02% -0.34%
Benchmarks
Economic Profit Margin, Competitors3
Amazon.com Inc. -2.46% -8.16% 1.91% 0.70% -0.69%
Home Depot Inc. 7.34% 8.07% 6.10% 7.73% 7.50%
Lowe’s Cos. Inc. 4.19% 6.70% 3.84% 3.05% -0.45%
TJX Cos. Inc. 3.02% 2.97% -6.69% 3.63% 3.29%

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 711,011 ÷ 10,249,678 = 6.94%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Ulta Beauty Inc. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.