Future returns remain the primary concern for investors. However, looking at past stock returns can also impart wisdom. This is because it can help you find out what the company has done and what it has not done, and how the stock price has reacted. It is also important to compare the return versus the appropriate return Standard.
Turn to the familiar retail name, how much wealth he has Alta Beauty (NASDAQ: ULTA) created for shareholders over the past five years?
Five years ago, Ulta stock was trading at about $267 a share and closed at more than $415 on Jan. 8. This results in a rise of 57.6%. Your $5,000 investment could have grown to $7,878. Ulta Beauty stock doesn’t pay a dividend, so that doesn’t affect the yield.
This sounds impressive. But how would you do if you invested? Negatively In index like Standard & Poor’s 500? During this period, the index returned 95.5%, including profits. Hence, your investment of $5,000 will rise to $9,776.
Ulta Beauty stock has fallen over the past year. Its growth has been rapid, but sales have been slow recently. People have cut back on their spending, having to pay more for basic items like food and rent.
Fiscal third-quarter same-store sales (comps) increased just 0.6% in the period ending Nov. 2, 2024. Most of the comp gains came from increased traffic, showing shoppers were drawn to Ulta’s stores and website.
Ulta offers products such as makeup, skin care, and fragrances at different prices. This would help the company so that inflationary pressures ease and consumers looking for low-priced goods feel more comfortable spending money.
The stock is trading at a price-to-earnings (P/E) ratio of 17, compared to about 20 a year ago. That’s well below the S&P 500’s P/E of 30. With the stock falling on cyclical concerns, long-term investors may look back in five years and be happy with the returns and wealth created.
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