On Friday, TD Cowen made an adjustment to its outlook on Sally Beauty Holdings (NYSE:SBH), increasing the price target to $14.00 from the previous $13.00. The firm has kept its Hold rating on the stock. The adjustment follows Sally Beauty's earnings per share (EPS) performance, which exceeded market expectations by two cents, coming in at 50 cents versus the predicted 48 cents. This positive outcome was attributed to better-than-expected comparable store sales (comps), which saw a 2.0% increase compared to the Street's forecast of 1.7%.
Sally Beauty's comparable sales showed a healthy uptick, with Sally Beauty Supply (SBS) registering a 2.6% rise and Beauty Systems Group (BSG) achieving a 1.3% increase. The analyst acknowledged the company's forward momentum, which has been supported by growth in both new and existing customer bases. Additionally, the analyst recognized Sally Beauty's strategic modernization initiatives, which include the SBS brand refresh and the introduction of Studio by Sally, Happy Beauty, marketplace, and product innovation.
The analyst's commentary highlighted the company's valuation, noting it as modest with a price-to-earnings (P/E) ratio of 7 times and a free cash flow (FCF) yield of approximately 11%. These figures reflect the financial health and investment potential of Sally Beauty Holdings.
The focus on Sally Beauty's recent accomplishments underscores the company's ability to navigate the retail landscape successfully. The combination of customer growth and strategic initiatives like brand refreshes and product innovation have contributed to the company's positive performance metrics.
Sally Beauty Holdings' stock will continue to be monitored by investors and analysts alike, as the company's efforts in modernization and customer expansion play out in the competitive beauty supply market. The updated price target by TD Cowen reflects the firm's assessment of Sally Beauty's current position and future prospects within the industry.
In other recent news, Sally Beauty Holdings reported a 1.5% increase in consolidated net sales for the fourth quarter of fiscal 2024, reaching $935 million, with a 2% growth in comparable sales. The company also announced plans for a brand refresh in the second half of fiscal 2025 and the acquisition of Exclusive Beauty Supplies in Florida. Furthermore, the company aims to save $70 million by the end of fiscal 2025 through its Fuel for Growth program.
DA Davidson recently adjusted its financial outlook for Sally Beauty, raising the price target to $13.00 from the previous $12.00 while maintaining a neutral rating on the stock. This revision followed the company's fourth-quarter financial performance, which surpassed expectations with higher comparable sales and earnings per share. In response to the company's forward-looking statements for the fiscal year 2025, DA Davidson revised its sales growth estimate to a 0.8% year-over-year increase from a previously projected flat growth.
Looking ahead, Sally Beauty projects flat to up 2% in consolidated net sales and comparable sales for fiscal 2025, with adjusted operating margin between 8.5% and 9%. The company also plans for approximately $120 million in capital expenditures, with a third of cash deployment expected to be used for share repurchases.
InvestingPro Insights
Sally Beauty Holdings' recent performance aligns with several key metrics and insights from InvestingPro. The company's P/E ratio of 8.9 over the last twelve months as of Q4 2023 is consistent with the modest valuation mentioned in the article, supporting TD Cowen's assessment. This attractive valuation is further emphasized by an InvestingPro Tip indicating that SBH has been profitable over the last twelve months.
The company's strong recent performance is reflected in InvestingPro data showing a significant 51.26% price total return over the past year and a 26.08% return over the last six months. This aligns with the InvestingPro Tip highlighting SBH's "large price uptick over the last six months" and "high return over the last year," which could be attributed to the company's successful strategic initiatives and comparable store sales growth mentioned in the article.
Additionally, InvestingPro data reveals that SBH's liquid assets exceed short-term obligations, suggesting financial stability that may support the company's ongoing modernization efforts. For investors seeking more comprehensive analysis, InvestingPro offers 7 additional tips for Sally Beauty Holdings, providing a deeper understanding of the company's financial health and market position.
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