Ulta Beauty Stock Hits a New 52-Week Low: If It’s Not in the Buy Zone, It’s Awfully Close

Ulta Beauty (ULTA) was one of the more prominent Nasdaq stocks hitting a new 52-week low on Tuesday. While the Nasdaq highs outnumbered the lows 317 to 161, Ulta’s 1.77% drop yesterday brought its 2026 decline to more than 25%. 

Not too long ago, it could do no wrong. Now, it’s dragging down the S&P 500. Of the 503 stocks in the index, only 46 have performed worse year-to-date. How the mighty have fallen. 

If I told you that stat but didn’t say which company it was, you would probably tell me to take a walk. You’re not interested. The reality is that Ulta Beauty stock is up 2,405% since it went public on Oct. 30, 2007, at $18 a share. That’s a compound annual growth rate of 18.74%. If you bought 100 shares in its IPO and still hold today, you’d have $45,078.

There are several reasons why the shares have retreated in 2026. I’ll get into those. However, if you’ve been thinking about owning ULTA for the long haul but thought it was too expensive, if it’s not in the buy zone, it’s awfully close. 

Here’s why. 

Ulta’s Headwinds

From Ulta’s Feb. 18 52-week high of $714.97, its shares are down 37%. Several headwinds Ulta faces are responsible for the significant move lower. 

One of Ulta’s strengths could now be one of its weaknesses. Long considered the store that middle-income consumers visited for their beauty needs -- as opposed to Sephora or even higher-end retailers -- investors are concerned that Ulta’s core customers are running out of disposable cash due to rising inflation caused by higher oil prices. 

Not only is the falling share price indicative of investor skepticism about Ulta’s ability to keep growing its top-line revenue in an inflationary environment, but it also suggests investors believe the company’s margins are unsustainable, leading to lower earnings. 

As you know, share prices follow earnings. 

William Blair analyst Dylan Carden wrote about this in a note following Ulta's Q1 2026 earnings report. 

“As expressed directly on the earnings call in the form of several questions about implied deceleration and gross margin softness, there is clear anxiety that capacity to maintain or take share increasingly requires steeper investment that puts earnings at greater risk,” Barron’s reported Carden’s comments. 

The third headwind I’ll mention is Ulta’s rising marketing costs to defend and grow its market share. The beauty market is intensely competitive. Everyone from Amazon (AMZN) to Walmart  (WMT) to Kohl’s (KSS) is selling beauty products in large part because they offer healthy margins.  

According to CSIMarket, Ulta has 28.4% of the beauty market as of Q1 2026, second only to Estee Lauder (EL) at 33.15%, but ahead of Bath and Body Works (BBWI), Coty (COTY), and Sally Beauty Holdings (SBH).

Last August, Ulta and Target (TGT) announced they would end their in-store beauty partnership after five years. The partnership saw Ulta open more than 600 beauty shops within Target locations. 

While the stores provided Ulta with an additional distribution channel, they ultimately limited the retailer’s ability to control the quality of service at those stores. 

Target will launch Target Beauty Studios in the former Ulta spaces in the fall. Should they be successful, that would be a hit to market share. It’s something to keep an eye on. 

Why Ulta’s Still Got It

I’ve followed the company since Mary Dillon's early days of her tenure as Ulta's CEO in 2014. I was deeply disappointed when she and the board decided in September 2020 to cancel their plans to enter the Canadian market to focus on online sales. I continue to believe that the Canadian market is perfect for the retailer’s business model. 

One of the company’s focuses under CEO Kecia Steelman’s Ulta Beauty Unleashed plan is to expand the retailer’s international presence.

In July 2025, it acquired British specialty retailer Space NK for $387 million. As of Q1 2026, it had 87 Space NK stores in the UK and Ireland. In August 2025, it opened its first store in Mexico through its joint venture with Grupo Axo, a Mexican apparel distributor of more than 60 international brands. In the first quarter, the joint venture opened a second store in Mexico City. Lastly, Alshaya, its franchise partner in the Middle East, opened a third store at the Dubai Mall, one of the world’s most visited shopping destinations anywhere. 

I could see someone like Aritzia (ATZAF) becoming Ulta’s franchise partner in Canada. It would be a good growth vehicle for both companies. 

To grow its younger customer base, it opened on TikTok Shop on March 17. TikTok Shop is the fourth-largest health and beauty retailer in the U.S. with $4.4 billion in annual sales as of March. Ulta’s offering included products from more than 15 brands across makeup, skincare, hair, and fragrance. 

TikTok users who buy on TikTok Shop tend to spend more. This should generate substantial new revenue for Ulta.

Lastly, it continues to leverage its Ulta Beauty Rewards loyalty program to drive revenue growth. It finished the first quarter with nearly 47 million members, up 4% from Q1 2025. 

In fiscal 2025 (January year-end), 73% of its U.S. loyalty members bought exclusively at its brick-and-mortar stores, indicating a highly engaged customer base. Even better, 19% bought in-store and online, and these customers spend three times as much as those only transacting in-store.

The Bottom Line on ULTA Stock

In the trailing 12 months ended May 2, Ulta generated $1.13 billion in free cash flow. Based on its enterprise value of $21.47 billion, it has a free cash flow yield of 5.3%. I consider anything between 4% and 8% to be fair value. 

By almost every financial metric, Ulta’s stock is considerably cheaper than at any time in the past decade. 

Its current price-to-sales ratio is 1.69. Only once -- Q1 2025 -- did it get close at 1.71. Otherwise, it’s in a league of its own. The same applies to its enterprise value relative to the next 12 months' EBIT (earnings before interest, taxes, depreciation, and amortization) estimate. At 12.73x, it was only lower in Q1 2024 and Q2 2024 over the past decade. 

While analysts have gotten a little more cautious with Ulta, 18 of the 25 analysts (4.32 out of 5) covering Ulta rate it a Buy, with a $623.17 target price. 

Will it get back to $700 in 2026? No, but it might in 2027. Ulta remains one of America’s best retail stocks despite its 2026 swoon. 

If it’s not in the buy zone, it's awfully close.