Post #144 by rnam on the US Policy board

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or at least starting to recognise that DG (PE 19 post this morning's gain) was a little better from a valuation perspective compared to DLTR (PE 24).

I prefer to look at the earnings guidance for the next year. DG has guided to EPS of $6.80 to $7.55 for year ending Jan 25. That works out to fwd PE of 21 at the mid point of the EPS guidance.

For 2024, Ulta (ULTA) expects a profit of $26.20 to $27 per share on sales of $11.7B to $11.8B. The Street is expecting a higher profit of $27.03 on $11.7B in sales.

Comparable sales are expected to increase 4% to 5% versus comparable sales of 5.7% in 2023. The operating margin is expected to contract to 14% - 14.3% from 15% in 2023.

https://seekingalpha.com/news/4079722-ulta-shares-...

Stock has fallen by about 7% and is now trading at just below 20 fwd PE at mid-point of guidance.

The beauty segment of retail esp. Ulta has much higher growth, margins, ROE/ROTC than dollar stores / DG. With Ulta sporting a forward PE valuation slightly below DG, maybe Ulta is the better buy.

What do you think?

p.s. Sorry to post about Ulta on DG board, but Ulta does not have an active board.

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