By Teresa Rivas

Scandals, geopolitical tensions, wild weather swings, and worries that artificial intelligence is coming for us all. Against this bleak backdrop people still want to look good. No wonder Ulta Beauty stock looks attractive.

Concerns that the pandemic's mask mandates and safe-at-home lifestyle would doom cosmetics turned out to be wide of the mark. In reality, many people spent the lockdown perfecting new multistep skin care routines. Postpandemic, new makeup trends and the ubiquity of social media and face filters have led to a surge in beauty interest across ages and genders.

Enter Ulta. The beauty retailer invested in its digital capabilities, loyalty program, supply chain, and brand assortment last year. The moves have paid off as the stock rallied 30% over the past six months . But the good times may just be getting started. Raymond James, which upgraded the stock at the end of January, thinks it should trade to $790, up 15% from Wednesday's close of $689.42.

A new management team, exclusive merchandise, and increased pocket change from this year's tax returns reflecting changes in the One Big Beautiful Bill Act mean that 2026 should continue to look good even after a 13% year-to-date rally.

Ulta is a "best-in-class retailer with a strong value proposition in the 'masstige' category," says Chris Miller, portfolio manager at Allspring Global Investments, which owns the shares. "The company is competing well in the market in both marketing and merchandising and is back on their front foot in the ever-evolving retail landscape."

It's certainly not an easy time to be a retailer. Years of inflation have taken their toll, global consumption growth of personal care products has slowed, and while tariffs have for now been settled, they represent a steadily higher cost.

Nonetheless, the economy and employment continue to chug along, and Ulta's customers are often on the higher side of the K-shaped recovery. This bodes well. "Ulta is seeing the number of customers increase, and those customers are also spending more frequently, so they're commanding greater wallet share," says Randy Hare, director of equity research at Huntington Bank, which owns the stock. "Earnings likely bottomed in 2025, so earnings growth is just starting to ramp up. We think earning acceleration is going to drive this stock. This is a multiyear upcycle."

Ulta's earnings per share dropped nearly 3% in its fiscal 2025; fiscal 2026, which ended at the start of February, will probably see EPS climb 1%, to $25.59, before they accelerate more than 11% in the current fiscal year to $28.50.

Earnings growth -- along with gross margins hovering just below 40% -- make the stock's multiple of 24 times understandable, especially considering that its average price/earnings ratio has been about 33 times over the past five years.

Bill Smead, founder and chief investment officer at Smead Capital Management, which owns the shares, believes that a broadening of the market will also help Ulta and other nontech stocks. "When the dot-com bubble burst, there was a bull market for everything else that hadn't been inflated by tech mania, and at some point money will come out of the largest of the large-cap names again," he says. "A company like Ulta, that's a good capital allocator with high return on invested capital that trades at a reasonable price, is going to be fine."

The company's numbers look more than fine now. Ulta's rewards program has over 46 million members, who account for some 95% of its sales, and it's constantly improving that offering: The new Replenish & Save program works much like Amazon.com subscriptions -- providing a small discount and free shipping in return for consumers locking in purchases -- while its separate teen accounts will help it further build relationships with young consumers who have a lifetime of shopping loyalty ahead of them.

Ulta's recent performance shows that it has been more than up to the challenge of the post-Covid demand hangover and the competitive pressure of Kohl's partnership with LVMH Moët Hennessy Louis Vuitton's Sephora. "The abatement of both of those issues in 2025 and into 2026 offers compelling tailwinds to sentiment and earnings progress," notes Allspring's Miller. And the fact that Ulta is disengaging from Target is much more of a problem for the latter, given its rocky performance in recent years.

That said, while there are clear pathways to growth this year, investors may rightly worry that the stock can't repeat its huge 2025 rally; likewise, it isn't as cheap as it was before. At the same time, the economy has remained remarkably strong and consumers surprisingly resilient -- if a true downturn were to emerge, it's hard to know how important skin essentials would be to many shoppers.

However, Ulta's success with exclusive brands, young shoppers, and its growing international presence are all points in its favor, and as companies like Walmart and Costco Wholesale show, the market isn't opposed to paying a premium to truly consistent retailers.

Its market is expanding all the time, too. Huntington's Hare isn't just an investor; he's also a customer, saying that he happily uses some of the facial products his wife buys at Ulta. That's proof that the company's audience is far more than social-media-obsessed teens, and that it's a real shift in how self-care is seen across the board. "This conversation wouldn't have happened 10 or 20 years ago."

Beauty might just be skin deep, but it can be a solid business if done right. Ulta Beauty has executed, well, beautifully. Its stock should continue to benefit.

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February 19, 2026 08:01 ET (13:01 GMT)

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