Many stocks have been testing new highs in 2020, and one of the most notable is Sally Beauty Holdings Inc. (SBH). Currently, SBH is trading at $16.03 and the avg recommendation for the stock is Hold. while the current analyst price target stands at $14.19.
To add more color to this target, the company’s high over the last year is $21.98 and the low is $6.28. Over the last 52 weeks, SBH is down -27.07% while the S&P 500 is up 1.21%. The catalyst for this interesting swing was the company’s recent earnings report.
A Notable Earnings Report
In the last quarter, SBH reported a profit of $429.76 million. Sally Beauty Holdings Inc. also saw revenues increase to $871.02 million. In addition, SBH has free cash flow of $4.15 million as of 03-2020 The company’s EBITDA came in at $71.07 million which compares well with its peers.
SBH booked profit margins of 5.50%, its Return on Equity (ROE) is -454.90%, and its Return on Assets is 8.50%. All told, it is clear that, SBH needs to be on your watchlist.
About Sally Beauty Holdings Inc.
If readers are unfamiliar, Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care, skin and nail care, styling tools, and other beauty products for retail customers and salon professionals. This segment also provides products under third-party brands, such as Wella, Clairol, OPI, Conair, and Hot Shot Tools, as well as exclusive-label brand merchandise. The Beauty Systems Group segment offers professional beauty products, such as hair color and care, skin and nail care, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce Websites, and sales force, as well as through franchised stores under the Armstrong McCall store names. This segment also sells products under third-party brands, such as Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, and Chi. As of November 18, 2019, the company operated 5,061 stores, including 159 franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. It also distributes its products through full-service/exclusive distributors, open-line distributors, direct sales, and mega-salon stores. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.
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Of course, we must look beyond the financials and question how well those numbers represent the sustainable earnings power of the business. Investors need to know how sustainable this current run. SBH has a short ratio of 8.57 and outstanding shares of 114.82M.
SBH has seen increased volume after this news and investors are putting their support behind the value proposition. Furthermore, 10-day volume stands at 2.38 million and more growth is possible in the weeks ahead. Traders will also note the company’s earnings per share came in at 1.74. Sally Beauty Holdings Inc. SBH also noted assets of $2.92 billion at the end of the last quarter. Investors should also keep an eye on sector updates as SBH has historically followed its peers on positive news.
All told, Sally Beauty Holdings Inc. SBH has strung together solid data and demonstrated underlying fundamentals. At its current valuation, SBH represents an interesting risk/reward case. Traders should stay tuned to see if this recent report will push the stock to test recent resistance levels.
Sally Beauty Holdings Inc. SBH is now commanding a market cap of 1.77B and a float of 107.70M. SBH is increasing its credibility in this sector and that could lead to more upside down the line. Sign-up for continuing coverage on shares of SBH stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in SBH, either long or short, and we have not been compensated for this article.