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Sally Beauty Holdings (SBH)
NYSE:SBH
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Sally Beauty
(NYSE:SBH)
70Neutral
Positive Factors
Financial Performance
SBH has also made progress in deleveraging and is now below 2x leverage.
Growth and Innovation
Management highlighted strong growth in hair color and e-commerce, driving SBS growth, while newness, innovation, and increased distribution drove BSG growth.
Valuation
The company is currently trading below its 5-year average P/E despite its unique beauty businesses and initiatives, indicating it may be undervalued.
Negative Factors
Consumer Pressure
Low-end consumer pressure at SBS and stylists buying closer to need at BSG pose risks.
External Risks
There are concerns about external factors such as tariff impact and low-end consumer pressure, which may affect pricing and sales.
Tariff Impact
Key risks include tariff impact (China represents 10% of sourcing), which may result in price increases.
Sally Beauty (SBH) vs. S&P 500 (SPY)
Market Cap
$902.30M
Dividend YieldN/A
Average Volume (3M)2.45M
Price to Earnings (P/E)5.3
Beta (1Y)1.14
Revenue Growth0.57%
EPS Growth6.28%
CountryUS
Employees12,000
SectorConsumer Cyclical
Sector Strength50
IndustrySpecialty Retail
Share Statistics
EPS (TTM)1.67
Shares Outstanding101,954,445
10 Day Avg. Volume2,096,560
30 Day Avg. Volume2,449,964
Financial Highlights & Ratios
PEG Ratio0.85
Price to Book (P/B)N/A
Price to Sales (P/S)0.24
Price to Cash Flow (P/CF)6.50
P/FCF Ratio8.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.10Price Target Upside48.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Sally Beauty Business Overview & Revenue Model
Company DescriptionSally Beauty Holdings, Inc. (SBH) is a leading international specialty retailer and distributor of professional beauty supplies. It operates primarily in two business segments: Sally Beauty Supply and Beauty Systems Group (BSG). The company offers a wide range of beauty products, including hair color, hair care, skin care, and nail products, catering to both professional stylists and retail consumers. With thousands of stores worldwide, Sally Beauty provides an extensive selection of high-quality products from well-known brands as well as its own private label offerings.
How the Company Makes MoneySally Beauty Holdings generates revenue through the sale of beauty products and supplies via its two main business segments: Sally Beauty Supply and Beauty Systems Group. Sally Beauty Supply focuses on retail sales, targeting individual consumers and do-it-yourself beauty enthusiasts through its network of physical stores and online platforms. Beauty Systems Group, on the other hand, caters to professional stylists and salons, providing them with professional-grade products and equipment. Revenue is primarily driven by product sales, with additional income from private label brands that often offer higher margins. The company benefits from strategic partnerships with well-known beauty brands and leverages its distribution network to maintain a strong market presence. Additionally, Sally Beauty engages in promotional activities and loyalty programs to attract and retain customers, further supporting its revenue streams.
Sally Beauty Financial Statement Overview
Summary
Sally Beauty demonstrates stable profitability and efficient cash flow management with consistent margins, but faces challenges with revenue growth and high leverage.Income Statement
Sally Beauty shows a stable gross profit margin of around 50% over recent years, indicating consistent cost management. However, the revenue growth has been stagnant, with minor fluctuations. The net profit margin is modest, reflecting competitive industry pressures. EBIT and EBITDA margins are stable, suggesting operational efficiency but limited top-line growth.72
Positive
Balance Sheet
The debt-to-equity ratio is relatively high, indicating significant leverage, which could pose risks in volatile markets. However, the company has improved its equity base over the years, enhancing its equity ratio. Return on equity shows a positive trend, suggesting effective utilization of shareholder funds despite the leverage concerns.65
Positive
Cash Flow
Sally Beauty demonstrates strong operating cash flow relative to net income, indicating good cash conversion efficiency. The free cash flow is positive and shows growth over the years, which supports financial flexibility. However, the capital expenditures indicate ongoing investments, which could impact future cash flow if not managed carefully.77
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.72B | 3.72B | 3.73B | 3.82B | 3.87B | 3.51B | Gross Profit |
| 1.87B | 1.89B | 1.89B | 1.92B | 1.95B | 1.72B | EBIT |
| 314.29M | 282.73M | 338.65M | 265.29M | 320.85M | 166.01M | EBITDA |
| 395.97M | 282.73M | 441.06M | 365.22M | 423.05M | 272.79M | Net Income Common Stockholders |
| 176.04M | 153.41M | 184.60M | 183.55M | 239.86M | 113.25M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 97.17M | 32.82M | 123.00M | 70.56M | 400.96M | 514.15M | Total Assets |
| 2.75B | 2.79B | 2.73B | 2.58B | 2.85B | 2.90B | Total Debt |
| 1.64B | 1.60B | 1.68B | 1.73B | 1.94B | 2.34B | Net Debt |
| 1.54B | 1.49B | 1.55B | 1.66B | 1.54B | 1.83B | Total Liabilities |
| 2.20B | 2.16B | 2.22B | 2.28B | 2.57B | 2.88B | Stockholders Equity |
| 550.85M | 628.53M | 508.75M | 293.64M | 280.74M | 15.44M |
| Cash Flow | Free Cash Flow | ||||
| 158.35M | 145.36M | 158.57M | 57.25M | 307.96M | 316.03M | Operating Cash Flow |
| 228.97M | 246.53M | 249.31M | 156.50M | 381.86M | 426.89M | Investing Cash Flow |
| -55.02M | -108.91M | -99.78M | -102.42M | -76.02M | -123.78M | Financing Cash Flow |
| -188.63M | -153.73M | -100.82M | -373.68M | -419.97M | 139.76M |
Sally Beauty Technical Analysis
Negative
8.85
Price Trends
9.68
Negative
11.04
Negative
11.49
Negative
Market Momentum
-0.21
Negative
45.36
Neutral
70.79
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBH, the sentiment is Negative. The current price of 8.85 is below the 20-day moving average (MA) of 8.95, below the 50-day MA of 9.68, and below the 200-day MA of 11.49, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 45.36 is Neutral, neither overbought nor oversold. The STOCH value of 70.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SBH.
Sally Beauty Risk Analysis
Sally Beauty disclosed 32 risk factors in its most recent earnings report. Sally Beauty reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Sally Beauty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $16.67B | 14.17 | 50.39% | ― | 0.79% | -2.70% | |
70 Neutral | $902.30M | 5.31 | 29.39% | ― | 0.57% | 6.28% | |
62 Neutral | $3.66B | 38.55 | 14.24% | ― | 46.27% | -26.45% | |
60 Neutral | $5.33B | 242.82 | 7.53% | 0.14% | ― | ― | |
59 Neutral | $12.26B | 11.12 | -0.55% | 3.78% | 1.42% | -20.63% | |
57 Neutral | $4.75B | 40.12 | 0.33% | ― | 1.35% | -99.94% |
* Consumer Cyclical Sector Average
Performance Comparison
SBH
Sally Beauty
8.85
-3.72
-29.59%
ULTA
Ulta Beauty
359.47
-169.54
-32.05%
COTY
Coty
5.45
-6.44
-54.16%
ELF
e.l.f. Beauty
64.83
-127.14
-66.23%
LB
LandBridge Company LLC Class A
69.69
46.80
204.46%
Sally Beauty Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -3.59% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
Sally Beauty Holdings reported solid Q1 results with consistent sales growth and improved profitability driven by strategic initiatives and strong e-commerce performance. However, the company faced challenges from foreign currency headwinds and a difficult macroeconomic environment, which influenced flat guidance for the second quarter.Highlights
Consistent Sales Growth
The company reported a third consecutive quarter of positive top line performance in both Sally and BSG segments, with consolidated net sales of $938 million, representing an increase of 0.7%.
Improved Profitability
Adjusted operating margin increased by 50 basis points to 8.4%, and adjusted diluted EPS was up 10% to $0.43 compared to the prior year.
Successful Strategic Initiatives
The Fuel for Growth program delivered approximately $11 million in pretax benefits, contributing to gross margin and SG&A improvements.
Strong E-commerce Performance
Global e-commerce sales were $99 million, up 9% year-over-year, representing 11% of total net sales.
Introduction of K18 Brand
BSG announced the launch of the premium hair care brand K18 in all stores and e-commerce in the U.S. and Canada, expected on April 1.
Lowlights
Foreign Currency Headwinds
Net sales included a 60 basis point unfavorable impact from foreign currency, affecting overall sales growth.
Challenging Macroeconomic Environment
January was particularly affected by a harsh flu season, weather, wildfires, and political news, which led to a choppy start for fiscal Q2.
Flat Second Quarter Guidance
The company provided guidance for Q2 with comparable sales expected to be approximately flat, reflecting ongoing macroeconomic challenges.
Company Guidance
During the first quarter of fiscal 2025, Sally Beauty Holdings reported several positive metrics, reflecting continued business momentum in both the Sally and BSG segments. Comparable sales grew by 1.6%, marking the fifth and third consecutive quarters of positive comps for BSG and Sally, respectively. Despite a 60 basis point headwind from foreign exchange, consolidated net sales saw a 0.7% increase, reaching $938 million. The gross margin expanded by 60 basis points to 50.8%, attributed to reduced shrink and lower distribution costs. Operating margin improved by 50 basis points to 8.4%, while adjusted diluted EPS rose by 10% to $0.43. Sally's segment achieved a 1.7% increase in comparable sales, with e-commerce sales growing 18% year-over-year. BSG also exhibited strength with a 1.4% rise in comparable sales. Looking ahead, the company maintains its full-year guidance for comparable sales growth in the range of flat to up 2%, despite anticipating a flat comp in fiscal Q2 due to macroeconomic and environmental factors.Sally Beauty Corporate Events
Business Operations and StrategyFinancial Disclosures
Sally Beauty Reports Strong Q1 Fiscal 2025 Results
Positive
Feb 13, 2025
Sally Beauty Holdings reported its first quarter fiscal 2025 results, showcasing a strong start with a 0.7% increase in consolidated net sales to $938 million, despite a 60 basis point unfavorable foreign currency impact. The company achieved a GAAP operating margin expansion to 10.7%, driven by strategic initiatives and operational efficiencies, including a significant reduction in operating costs and debt repayment. Additionally, Beauty Systems Group announced a distribution partnership with K18, set to launch in April 2025, enhancing their market presence in biotech-backed haircare products.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.