Monthly Archives: March 2016

Jabil Circuit: Zacks’ Bear of the Day Play

Sometimes having a big customer can be great, but if that client slows down their purchases, or changes their preferred vendor, it can be harmful for the business as a whole.  This is the case for this week’s Bear of the Day, Jabil Circuit (JBLAnalyst Report) as their big client Apple has lowered their order volumes over the past few months.

This Zacks Rank #5 (Strong Sell) is a worldwide independent provider of electronic manufacturing services. It designs and manufactures electronic circuit board assemblies and systems for major original equipment manufacturers in the communications, computer peripherals, personal computer, automotive and consumer products industries. It serves its original equipment manufacturer customers with dedicated work cell business units that combine high volume, highly automated continuous flow manufacturing with advanced electronic design and design for manufacturability technologies.

In their most recent earnings report, the company missed both the Zacks Consensus Earnings and Revenue estimates by a significant margin.  On a quarterly basis, the company saw earnings per share decline -36.1%, and revenues fell by -15.4%.  Specifically, the Diversified Manufacturing Services (DMS) segment saw revenues decline by -30% as sales came in about $150 million below management’s expectations.  This was due to Apple lowering their total volume of purchases.  Also, the Electronics Manufacturing Services (EMS) segment saw revenues decline by about -1.0%.

Due to the weaker than expected performance in the DMS segment, management lowered revenue expectations for Q3 16 from $4.75 billion to a range of $4.1-$4.3 billion, and lowered EPS estimates for the quarter from $0.51 to $0.12-$0.18.  Management also lowered FY 16 guidance in both EPS, and revenues as well; EPS estimates were lowered from $2.65 to $2.12, and revenues from $20 billion to $18.5 billion.

According to Mark Mondello, CEO, “…our DMS segment grew modestly as we faced a slight downturn in product demand late in our fiscal quarter specific to our mobility business.”  This slight downturn is shaving $1.5 billion off their revenue expectations for the year.

As you can see from the graph below, JBL has been underperforming the S&P 500 for almost all of 2016, and with the recent negative estimate revisions, this is expected to continue for the near term.

Declining Estimates

Due to the negative guidance, estimates for Q3 16, Q4 16, FY 16 and FY 17 have all seen significant downgrades over the past 30 days.   Q3 16 plummeted from $0.41 to $0.05, Q4 16 fell from $0.53 to $0.44, FY 16 slipped from $2.18 to $1.68, and FY 17 crashed from $2.49 to $1.92.

Bottom Line

As Apple’s ordering pattern continues to decline (management noted that January orders were below expectations, and that accelerated into February, which caused management to lower expectations for Q3 and Q4), the DMS segment will remain under pressure, and this is not expected to change within the very near term. Therefore, JBL will face this headwind into Q4 16.

If you are inclined to invest in the Electronics Manufacturing Services sector, you would be best served by looking into another investment opportunity.  All six companies in this sector hold a Zacks Rank #3 (Hold) or lower (Sell).

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Smith & Wesson: Zacks’Bull of the Day Play

While at times controversial, guns are a fixture in America, and have seen massive surges in purchases over the past several years.  With each news story about terrorism, or some government official talking about taking away gun owners’ rights, gun sales soar.  Gun manufactures have seen huge increases in total sales not just in firearms, but accessories as well.  Therefore, Smith & Wesson (SWHCSnapshot Report) is the Zacks Bull of the Day.

This Zacks Rank #1 (Strong Buy) is one of the world’s leading producers of quality handguns, law enforcement products and firearm safety and security products. Law enforcement personnel, military personnel, target shooters, hunters, collectors and firearms enthusiasts throughout the world have used the company’s products with confidence for 150 years. Smith & Wesson Corp. also manufactures and markets Smith & Wesson branded handcuffs and other products utilizing its metal working expertise and providing products and services too many external customers.

In their most recent earnings announcement, the company significantly beat both the Zacks Consensus Earnings and Revenue estimates by posting year over year gains in quarterly net sales (+61.5%), and quarterly GAAP net income (+287%).  Specifically, the firearms division saw net sales improve +54.4% YoY, with sales of handguns up +56.5%, and long gun sales up 85.6%.  The accessories division had net sales improve +163.9% over the same time period.  Also, management was also able to increase gross margins from 33.6% to 41.1%.

According to James Debney, President and CEO, “The combined strength of our firearms and accessories businesses delivered an exceptional performance, driven by healthy consumer demand across our growing portfolio of firearm and outdoor lifestyle offerings. During the third quarter, the Adjusted National Instant Criminal Background Check System (NICS) data, which serves as an indicator of consumer purchases, reported a significant increase in growth versus the prior year, especially in handguns. In addition, our product sell-through at distribution was much stronger than we had anticipated. Our flexible manufacturing model, combined with our ability to successfully utilize the internal inventories we had built in anticipation of potential sell-through strength, allowed us to capture incremental sales in the third quarter. Despite the fact that we entered our fourth quarter with lower inventories, we are focused on increasing the production rates of our key products during the fourth quarter and we are therefore increasing our guidance for the full fiscal year.”

Due to the strong quarter, management raised both non-GAAP EPS guidance for FY 16, and revenues as well.  Non-GAAP guidance was raised from a range of $1.36-$1.41 to a range of $1.68-$1.70.  The top-line guidance was lifted from a range of $650-$660 million to a range of $712-$717 million.

As you can see from the graph below, Smith & Wesson has a very strong history of beating earnings expectations, and has seen nice price bumps after each announcement.  You have to go back to 2011 for the last time they missed expectations.

Increasing Estimates

Due to the improved guidance by management, and their stellar quarterly performance, estimates for Q4 16, Q1 17, FY 16 and FY 17 have all seen upgrades over the past 30 days; Q4 16 rose from $0.47 to $0.54, FY 16 improved from $1.42 to $1.70, Q1 17 was raised from $0.34 to $0.36, and FY 17 jumped up from $1.52 to $1.73.

Bottom Line

A recent report by the FBI regarding firearm background checks stated that in February 2016 they did 2.6 million checks which was slightly down from their record month of 3.3 million in December 2015.  Further, the FBI stated that they did 23.1 million checks in 2015, and expect that number to rise +6.5% for 2016.  Which indicates that they expect gun sales to continue to rise throughout 2016.  This coupled with management’s estimate upgrades has SWHC looking good in 2016 and beyond.

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FreightCar America: Zacks’ Bear of the Day Play

FreightCar America Inc. (RAILSnapshot Report) is dealing with the downside of the rail car cycle. This Zacks Rank #5 (Strong Sell) is expected to see declining earnings over the next 2 years.

FreightCar America makes railroad freight cars and parts and leases freight cars through its JAIX Leasing Company subsidiary.

It builds coal cars, bulk commodity cars, covered hopper cars, intermodal and non-intermodal flat cars, mill gondola cars, coil steel cars and boxcars.

It has facilities across the country in Alabama, Illinois, Nebraska, Pennsylvania and Virginia.

The Best Year Since 2006 But…

On Feb 22, the company reported fourth quarter and full year results which were the best since 2006.

Even allotting for the sale of its railcar repair and maintenance services, it was still a record year.

But, that is expected to change over the next several years. The railcar manufacturing business has always been cyclical and it is now heading into the “down” part of the cycle.

You can see the change in the earnings picture:

2015: $2.32
2016 expected: $1.50
2017 expected: $1.41

2016 is an earnings decline of 35.3% year over year.

Backlog To Fall

The best indicator of the down side is the backlog.

Year end manufacturing backlog peaked in December 2014 at 14,791. At the end of December 2015 it was 9840. Non-coal cars comprised 99.6% of the total backlog as of Dec 31, 2015.

I would expect it to continue to fall as the number of orders remains lighter than prior years.

Is It Cheap?

Shares have dropped to 2-year lows.

But is it a bargain? They’re trading with a forward P/E of just 10 which seems cheap but with earnings expected to decline over the next 2 years, this could be a value trap.

For investors who are holding on through the down cycle, the company does pay a dividend, currently yielding 2.4%.

If you want to invest in the transportation area, you might want to consider Ryder System (RAnalyst Report). It’s a Zacks Rank #3 (Hold) but analysts expect it to be growing earnings by 7.4% in 2017.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

Carrols: Zacks’ Bull of the Day Play

Carrols Restaurant Group, Inc. (TASTSnapshot Report) is cashing in on low gasoline prices and demand for burgers. This Zacks Rank #1 (Strong Buy) put up a monster beat in the fourth quarter of 2015.

Carrols is the largest Burger King franchisee in the United States with 717 restaurants, as of the beginning of March 2016, and has operated Burger King restaurants since 1976.

Most of its restaurants are located in the Northeast, the Ohio Valley and the Mid-Atlantic states.

500% Beat in the Fourth Quarter

On March 3, Carrols reported its fourth quarter 2015 results and blew by the Zacks Consensus by 15 cents. Earnings were $0.18 compared to the consensus of $0.03.

Comparable restaurant sales jumped 5.1% year over year after increasing 3.6% in the year ago quarter.

For the year, comparable store sales rose 7.4% year over year compared to just 0.6% in 2014.

Carrols attributed the increase in sales to better Burger King marketing initiatives as well as new products such as chicken fries which were supposed to be a one-time product but were so successful they have been put on the permanent menu.

The company also continues to remodel its restaurants, completing the remodeling of 94 in 2015. By the end of 2015, more than 60% had the new updated 20/20 design image.

Bullish Outlook for 2016

Carrols sees continued growth in 2016 with comparable sales expected to rise between another 2% and 4% in 2016.

Commodity costs are forecast to fall 1% or rise about 1% in 2016, including a 5% to 10% decrease in beef costs.

It intends to pursue the acquisitions of additional Burger King restaurants in 2016, but the annual guidance does not include any impacts from those acquisitions.

Analysts are also bullish, with 2 estimates being increased for 2016 in the last 30 days. The Zacks Consensus Estimate has jumped to $0.53 from $0.45 in that time.

That is earnings growth of 39.5%.

They are also bullish on 2017 with another 29.3% earnings growth expected.

Shares Near 2-Year High

The shares have had strong momentum over the last year as the Burger King story turned positive. They are trading near a 2-year high.

Carrols isn’t cheap. It’s forward P/E is 25.4.

But for investors looking for a double digit growth play in the restaurant group with momentum, then Carrols is one to keep on the short list.

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Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Sina Corportation: Zacks’ Bear of the Day Play

SINA Corporation (SINAAnalyst Report) is an online media company and our Bear of the Day after it recently became a Zacks Rank #5 (Strong Sell). Sina operates four major business segments: Sina Weibo, Sina Mobile, Sina Online, and The company has been labeled “The Twitter of China” as it’s a similar micro-blogging site that has more than 500 million users.

Sina has a market cap of $3.2 Billion with a Forward PE of 177 and pays no dividend. The stock sports Zacks Style Scores of “D” in Growth, “F” in Value, and has a VGM score of “F”.
The company resides in an industry ranked 102 out of 265 (Top 38%) of the Zacks Industry Rank. However, estimate revisions show the company isn’t living up to industry standards.

Estimates Revisions

The chart below shows us that recent revisions have been to the downside. Over the last 30 days, estimates have fallen from -$0.07 to -$0.12 for the current quarter. For fiscal year 2016, we see estimates revised 32% lower, to $0.27 from $0.40. Furthermore, analysts have been in 100% agreement with four out of four analysts revising to the downside. These revisions suggest the company is struggling to monetize its platform, a similar problem Twitter (TWTRAnalyst Report) has had.

Earnings and Guidance

The company reported Q4 earnings on March 2nd with the topline coming in at $253.6 Million verse the $243 Million expected. EPS came in as a miss at $0.35 versus the $0.37 expected. Fiscal year 2016 revenue guidance was a disappointment, with the company seeing $850-950 Million in revenue versus the $950 Million expected. This number assumes a RMB currency depreciation versus the US dollar at an average rate of 8.5% in 2016.

Sina next reports earnings on May 12th. Based on lower estimate revisions, look for the downward trend in EPS and guidance to continue.

A Better Option

WebMD Health (WBMDSnapshot Report) is a Zacks Rank #2(Buy) that provides health information services to consumers, physicians and other healthcare professionals. The company aims to provide valuable health information, tools for managing your health, and support to those who seek information.

WebMD has a market cap of $2.3 Billion and a Forward PE of 33. The company sports a Zacks Style Score of “B” in growth, but “D” in value. The valuation is in question and short sellers have piled in the stock with 19% of the float short. However, the stock is bumping up against all-time highs and looks to squeeze the shorts before the company reports earnings on May 4th.

On February 23rd the company reported Q4 earnings of $0.60 a share versus the  $0.57 expected. Revenue came in slightly higher for the quarter at $192 Million versus the $191 expected. In addition, the company went on to guide fiscal year 2016 revenue $685-705 Million versus $694 Million. Traffic on the website reached 201 million unique users per month, generating almost 4 billion page views for the quarter, increases of 6% and 7% from the prior year period.

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Hooker Furniture: Zacks’ Bull of the Day Play

Hooker Furniture (HOFTSnapshot Report) is a leading manufacturer and importer of residential furniture, primarily targeted at the upper-medium price range. The Company offers diversified products, consisting primarily of home office, entertainment centers, imported occasional, bedroom, and wall systems, across many style categories within this price range. The company is the Bull of the Day after it recently became a Zacks Rank #1 (Strong Buy).

Hooker has a market cap of $360 Million with a Forward PE of 14. The stock pays a dividend of 1.25%, but should be looked at as a growth play, with Zacks Styles Score of “A” in Growth and Momentum. In addition, the company sits in an industry that is ranked 14 out of 265 (Top 5%) of the Zacks Industry Rank.

Recent Downgrade a Buying Opportunity

BB&T Capital Markets cut Hooker Furniture to Hold from Buy last week, causing a 7% sell off in one day. Considering the stock was up 50% on the year, the reaction to the downgrade isn’t much of a surprise.  The BB&T analyst reason for the cut was that its $33 price target was hit that it initiated on January 7th, a day after the company acquired Home Meridian International for $100 Million.

After a nice run up in January, Cerberus Capital founder Stephen Feinberg disclosed a 5.4% passive stake in the company. This gave investors’ confidence in the improving fundamentals of the company and pushed the stock to its recent highs.

Looking at the chart below we see a bullish channel that started forming last year. We are currently in the middle of the channel with the next earnings release on April 5th. Investors might want to start long positions now as analysts are raising estimates.

Earnings and Estimates

Last quarter the company reported Q3 $0.43 versus $0.30 year over year. Revenues came in at $65.3 Million verse the $63.2 Million last year.

CEO Paul Toms Jr. had some comments about the quarter and the future of the company: “Despite this temporary slow-down, we believe the fundamentals of the economy impacting our industry are strong and we see plenty of recovery left in the housing market. Millennials are entering the life stage in which they’re beginning families and buying homes. Housing remains affordable, unemployment is low, consumer confidence is relatively high, interest rates are at historically low levels and wages are growing. We believe we are very well-positioned to continue to perform at a high level of efficiency and to capitalize on improved demand, when it returns.”

Due to the positive outlook, analyst are raising estimates for fiscal year 2017. Over the last 7 days, estimates have been revised 36% higher, from $1.65 to $2.25. This growth will be what investors will be focused on and a catalyst for the stock price.

EPS Surprises

The company has a great track record of beating on EPS and will go for its sixth straight beat on April 5th. Looking at the chart below, it’s important to note the follow through on the recent quarter. Stock price is reflecting EPS beats, and if this continues into the next quarter we should see higher prices.

In Summary

Combinations of growth and momentum have this stock on investor’s radars. Upcoming earnings will determine whether or not the stock will test the bottom of the bullish channel. Investors might want to consider a starter position here after the recent pullback and add if that channel is tested and holds on earnings.  Investors entering the stock on short term pullbacks will be rewarded as the long term growth prospects of the company are in focus.

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Compass Minerals: Zacks’ Bear of the Day Play

Just like the weather changes with the seasons, so can your profits. Certain businesses are obviously more cyclical than others. While some cycles are based on economics others are based on weather. Today’s Bear of the Day is a company that should have had a wonderful winter season but instead struggled. Low snow fall meant low profits for Compass Minerals (CMPSnapshot Report).

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Compass Minerals is the largest producer of rock, or highway deicing, salt in North America and the UK. It operates the largest highway deicing salt mines in both regions. They are also the third largest producer of general trade salt in North America and the second largest in the UK, serving major retailers, agricultural cooperatives and food producers. Compass is also the largest producer of sulfate potash in North America.

While the numbers for the current quarter look decent, it’s the current year and next year numbers that are in trouble. Over the last sixty days, we’ve seen 3 analysts drop their earnings estimates for the current year and one dropping their estimate for next year. The bearish sentiment has dropped the Zacks Consensus Estimate for the current year from $5.59 to $4.02 and taken down next year’s number from $6.03 to $4.83.

The drop in estimates may seem a bit confusing given the great quarterly numbers we just received. For the quarter ending in December of last year EPS came in at $1.72, well above consensus calling for $1.38. This was the biggest beat of the last several quarters. In fact, the quarter before saw EPS coming in at 80 cents which was a nickel off consensus of 85 cents.

The diversified chemical industry is in the Bottom 18% of our Zacks Industry Rank right now. Compass itself is a Zacks Rank #5 (Strong Sell) with Value and Growth Style Scores of “D” and a Momentum Score coming in at “A.” Investors looking for other ideas within the same industry have a couple of choices which are Zacks Rank #1 (Strong Buy) stocks. Arkema (ARKAYSnapshot Report) and Shanghai Petrochemical (SHISnapshot Report) are two names to check out on your own.

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Mistras Group Inc: Zacks’Bull of the Day Play

It’s been a volatile year already in the stock market. We’ve seen a move straight down from January 1st to the 20th, a whipsaw higher and retest of the lows in mid-February, followed by a rip your face off rally to 2,056. With all the back and forth action, it’s been hard to key in on a winner in this market. I bet you’ll be surprised when you hear which sector has led the market YTD. As of the close Thursday, the top performing sector this year has been Utilities with a 12.6% return.

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Today’s Bull of the Day has quietly been coming on strong all year in a business that relates to this sector in a unique way. Mistras Group (MGSnapshot Report) helps companies ensure the integrity of their products and processes in the most cost effective fashion possible. Mistras Group provides comprehensive Non-Destructive Testing services to a broad range of industries, including power generation, sanitation, refineries, pipelines and smart grids. To sum it up, Mistras Group helps utilities and refineries keep tabs on their infrastructure to make sure everything is working the way it should.

The company is coming off a couple of huge earnings beats in a row. Last quarter EPS came in at 39 cents, a full 11 cents ahead of our Zacks Consensus Estimate. The quarter before that MG saw 23 cents EPS versus expectations for 9 cents. The beats forced analysts to up their expectations for earnings for the current year and next year. The bullish sentiment has increased the Zacks Consensus Estimate from 71 cents to 82 cents for the current year and increased next year’s forecast from 78 cents to 92 cents.The stock has been on a rampage since October when it gapped up from $14 to nearly $20 in one day. A volatile winter saw shares gyrate between $18 and $22.50. Since the market bottomed in February, MG has taken an upwards trajectory. The commodity channel index has remained above the zero line and shares have been increasing their distance from the 50 day moving average. With a 1.2% move on Thursday the stock is butting up against resistance from the July 2014 high. A breakout from this level would mean $30 is right around the corner.

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US Steel: Zacks’ Bear of the Day Play

United States Steel (XAnalyst Report) has consistently been a Zacks #4 Rank (Sell) or #5 Rank (Strong Sell) for more than a year now. In that time, the stock has fallen from 52-week highs above $27 to new lows near $6 this quarter.

In early March, steel stocks were given a boost when the U.S. Department of Commerce (“DOC”) levied preliminary anti-dumping duties on imports of cold-rolled steel from Brazil, China, India, Korea, Russia, Japan and the UK.

US Steel shares rallied strongly in the past two weeks on this news, regaining the $15 level not seen since last September. But until the earnings estimates for the company turn back up, X will remain in the cellar of the 4,000-plus companies in the Zacks Rank algorithm.

I’ll show you those estimates in a moment. First, let me share some details on the DOC action from a Zacks Research article on March 3…

The commerce department, in its preliminary determinations, found that these countries are illegally dumping cold-rolled steel into the U.S. market and therefore, are subject to anti-dumping duties. The ruling marks yet another victory for crisis-hit U.S. steel companies in their ongoing battle against unfairly-traded, cheap imports that continue to flood the American market.

The DOC, on Tuesday, imposed a whopping duty rate of 265.79% on imports of cold-rolled steel from China. Chinese companies did not respond to the DOC’s request for information and thus, got punished with big tariffs. This will badly hit Chinese exporters such as Angang Group Hong Kong Co., Ltd., Benxi Iron and Steel (Group) Special Steel Co., Ltd. and Qian’an Golden Point Trading Co., Ltd. Brazil and Japan exporters received duties of 38.93% and 71.35%, respectively.

The Cold-Rolled Earnings Decline for X

Here are the Zacks Detailed EPS Tables for US Steel…

What you don’t see here is where the 2016 full year estimate was one year ago: above $2 in profit. So this decline from +$2 to ($3.31) is a staggering deterioration in business. And that’s why it paid to stay on the side of the Zacks Rank early on.

US Steel may make a comeback on this DOC anti-dumping action. But wait to see if the analysts believe that enough to begin raising their estimates again. Until then, especially after the big run-up in shares, it’s probably best to remain on the sidelines.

Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money (FTM) portfolio.

Ulta Beauty: Zacks’ Bull of the Day Play

Ulta Beauty (ULTASnapshot Report) reported another great quarter on March 10, to cap off another terrific year of growth. They also raised guidance and detailed expansion plans as their rollout of new cosmetic and salon boutiques accelerates.

This strong report and outlook from management not only vaulted shares 17% from $163 to an all-time high of $192 on March 11, it also inspired analysts to start raising their earnings estimates for this year and next. And that’s why ULTA is back to a Zacks #1 Rank.

The Business of Beauty

Ulta Beauty is the largest US beauty retailer, with one-stop shopping for prestige, mass and salon products in 874 locations in 48 states (as of January 30). The company focuses on providing “affordable indulgence” to customers through a combination of product breadth, value and convenience with the distinctive environment and experience of a specialty retailer.

Since opening its first store 25 years ago, Ulta Beauty has grown to become the premier beauty destination for cosmetics, fragrance, skin, hair care products and salon services. They offer more than 20,000 products from over 500 well-established and emerging beauty brands across all categories and price points, including Ulta Beauty’s own private label.

Ulta Beauty also offers a full-service salon in every store featuring hair, skin and brow services. The company is recognized for its commitment to personalized service and distinctive, inviting stores and its industry-leading ULTAmate Rewards loyalty program. The online portal offers a collection of tips, tutorials and social content.

The Beautiful Numbers

ULTA reported a fourth-quarter earnings beat of nearly 10% with EPS of $1.69 vs the consensus of $1.54. Total sales increased 21.1%, reflecting 12.5% comparable (same store) sales growth vs expectations for 9.4% “comps.”

The 12.5% same store sales increase was driven by 8.6% growth in transactions and 3.9% growth in average ticket where retail comparable sales increased 10.4%, including salon comparable sales growth of 9.2%.

Salon sales increased 16.7% to $54.6 million from $46.8 million in Q4 2014 while E-commerce sales grew 44.2% to $94.8 million from $65.7 million a year ago.

Management also described new-store productivity as “very strong” and indicated that cannibalization was minimal.

The Beautiful Outlook

In addition to guiding 2016 EPS growth of 18%-20%, which corresponds to EPS of roughly $5.87-$6.00, management offered these highlights in their earnings press release…

*Achieve comparable sales growth of approximately 8% to 10%, including the impact of the e-commerce business

*Increase total sales in the mid to high teens percentage range

*Grow e-commerce sales in the 40% range

*Expand square footage by approximately 11% with the opening of 100 net new stores

*Remodel 12 locations

*Deliver earnings per share growth in the range of 18% to 20%, including the impact of the new Dallas distribution center, the accelerated rollout of prestige brand boutiques, the accelerated share repurchase program, and continued open market share repurchases

Regarding the 100 net new stores, approximately 70% will be in existing markets and 30% in new markets, with 60% in existing retail centers and 40% in new retail centers.

According to analysts at William Blair…

“When asked about longer-term store potential, the company referred to its latest 1,200-plus five-year (2019/2020) domestic target for its primary larger-format stores as having strong visibility, as well as potential for smaller-format stores over time.”

Analysts Give Their Models a Makeover

In the past week, analysts have raised earnings estimates to fit with the company’s guidance. Here are the Zacks Detailed EPS tables…

As you can see, the 4% and 4.8% bumps to estimates in the past 30 days for this year and next keep ULTA on pace for roughly 20% bottom-line growth. That will keep those institutional investors who are focused on domestic consumer growth accumulating ULTA shares, even with a forward multiple over 30 times.

Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money (FTM) portfolio.