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Sally Beauty Holdings (SBH)
NYSE:SBH
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Sally Beauty
(NYSE:SBH)
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Rating:64Neutral
Price Target:
$16.50
▲(2.68% Upside)
Action:ReiteratedDate:02/09/26
SBH scores as a mid-range opportunity: improving operating performance and cash generation are tempered by balance-sheet leverage, while technicals are constructive and valuation is attractive (low P/E). The latest earnings call adds support via a raised EPS floor and continued margin/cash-flow execution, but flat comps and category/promotional pressures remain key risks.
Positive Factors
Cash Generation
Sally Beauty's sustained operating cash flow and sizable free cash flow provide durable funding for capex, share repurchases and debt reduction. Strong cash conversion underpins financial flexibility, supports reinvestment in stores/ecommerce and cushions cyclicality in retail demand.
Margin Resilience
Healthy and improving gross margins across both segments reflect branded/private‑label mix and professional channel strength. Higher unit margins give the company structural pricing power and buffer against promotional pressure, supporting sustainable operating earnings.
Structural Cost & Growth Initiatives
The Fuel for Growth program, combined with store refreshes, fragrance rollouts and digital gains, creates durable cost savings and revenue levers. Recurring run‑rate savings and targeted store/ecommerce upgrades improve unit economics and enhance long‑term comp growth potential.
Negative Factors
Elevated Leverage
Persistently high leverage reduces financial flexibility for a specialty retailer with modest net margins. Elevated debt increases refinancing and interest expense risk, constrains strategic investments and makes the company more vulnerable to demand shocks or prolonged promotional cycles.
Stagnant Comparable Sales
Flat comps signal limited organic top-line momentum and indicate that customer frequency or basket remains challenged. Without sustained comp recovery, the company must rely on price, initiatives or share shifts to grow sales, which can take multiple quarters and requires continued investment.
Promotional & SG&A Pressure
Elevated promotions and rising SG&A erode margin expansion and can become a structural drag if competitive or labor cost trends continue. Combined with leverage, persistent SG&A pressure reduces the durability of earnings improvement and forces ongoing cost‑savings reliance.
Sally Beauty (SBH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.56B
Dividend YieldN/A
Average Volume (3M)1.73M
Price to Earnings (P/E)9.1
Beta (1Y)1.06
Revenue Growth-0.42%
EPS Growth31.64%
CountryUS
Employees12,000
SectorConsumer Cyclical
Sector Strength84
IndustrySpecialty Retail
Share Statistics
EPS (TTM)0.48
Shares Outstanding97,008,810
10 Day Avg. Volume1,299,856
30 Day Avg. Volume1,726,652
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)2.06
Price to Sales (P/S)0.44
P/FCF Ratio9.49
Enterprise Value/Market Cap1.91
Enterprise Value/Revenue0.80
Enterprise Value/Gross Profit1.55
Enterprise Value/Ebitda7.35
Forecast
1Y Price Target
$18.20Price Target Upside13.25% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)2.07
Revenue Forecast (FY)$3.74B
Sally Beauty Business Overview & Revenue Model
Company DescriptionSally 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 products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under third-party brands, such as Wella, Clairol, OPI, Conair, and L'Oreal, as well as exclusive-label brand merchandise. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under third-party brands, such as Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, and Olaplex. As of September 30, 2021, the company operated 4,777 stores, including 134 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.
How the Company Makes MoneySally Beauty generates revenue primarily through the sale of beauty products in its retail stores and online platforms. Key revenue streams include sales from its Sally Beauty Supply stores, which cater to both retail customers and professionals, and its Beauty Systems Group segment, which supplies salon professionals with high-quality beauty products. The company also benefits from private label brands, which typically offer higher margins compared to third-party brands. Additionally, Sally Beauty has established relationships with various professional beauty brands, allowing them to offer exclusive products that attract customers. Their loyalty programs and promotional sales further drive customer retention and increase sales volume, contributing significantly to their overall earnings.
Sally Beauty Earnings Call Summary
Earnings Call Date:Feb 09, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented multiple clear operational and financial wins — EPS beat, margin expansion, strong cash flow, progress on the Fuel for Growth program, robust color and ecommerce performance, and strategic initiatives (fragrance roll-out, Sally Ignited) gaining traction. These positives were balanced by near-term headwinds: flat consolidated comps, weakness in the care category, slightly elevated promotions and SG&A pressures, modest sales impact from the Europe exit, and macro-driven softness (government shutdown, weather). Overall, the company demonstrated disciplined execution and provided a modestly improved full-year outlook, with the strategic initiatives positioned to drive future growth.Q1-2026 Updates
Positive Updates
Consolidated Sales and EPS Beat
Total net sales of $943 million, up 0.6% year-over-year; consolidated comparable sales flat to prior year. Adjusted diluted EPS of $0.48, up 12% year-over-year and above guidance.
Strong Margin and Operating Results
Adjusted gross margin expanded ~50 basis points to 51.3% (management cited ~51%), and adjusted operating income of $80 million came in at the high end of expectations.
Robust Cash Generation and Capital Allocation
Operating cash flow of $93 million and free cash flow of $57 million in Q1; $20 million of term loan debt repaid and $21 million deployed to repurchase 1.4 million shares; net debt leverage reduced to ~1.5x.
Sally Segment Strength — Color & Ecommerce
Sally net sales of $532 million, up 1.2%; Sally comparable sales essentially flat (+0.1%). Color category up 8% year-over-year; Sally ecommerce grew 20% to $50 million (9% of segment sales). Sally segment gross margin improved 20 bps to 59.8% and operating margin was 14.7%.
BSG Margin Improvement and New Brand Launches
BSG net sales $412 million (down 0.2%); gross margin expanded 90 bps to 40.2% and operating margin rose to 13.1% (up 90 bps). New brand launches (Milkshake, Keratin Complex) rolled into stores and ecommerce in Q1.
Fuel for Growth Program Delivering Savings
Captured $14 million of pretax Fuel for Growth benefits in Q1 (including $4.5 million SG&A benefit in period); tracking to capture ~$45 million of benefits in fiscal 2026 and reach cumulative run-rate savings of ~$120 million by year-end.
Product & Store Innovation Momentum
Fragrance roll-out (1,000 stores in Q1) drove strong demand and out-of-stocks; plan to expand fragrance to ~2,000 stores. Sally Ignited: 8 store refreshes in Q1 (38 total), on track for ~80 Ignited stores by year-end with mid-to-high single-digit lifts in new/reactivated customers and higher UPT/ATV in Ignited locations.
Raised Full-Year EPS Floor and Stable Guidance
Raised the low end of full-year adjusted diluted EPS guidance to $2.02 (range $2.02–$2.10). Reiterated full-year net sales guidance of $3.71–$3.77 billion, comparable sales flat to +1%, adjusted operating earnings $328–$342 million, capex ~$100 million, and free cash flow ~$200 million.
Negative Updates
Overall Comp Sales Stagnation
Consolidated comparable sales were flat for the quarter, reflecting pockets of softness despite other gains; BSG comparable sales declined slightly by ~20 basis points.
Care Category Weakness
Care category underperformance: Sally care declined 6% year-over-year while care was flat at BSG, indicating softness in non-color categories.
Macro Disruptions Impacting Demand
Government shutdown and weather events caused macro volatility and temporary softness in spending and appointment behavior, particularly impacting discretionary add-on services and early-quarter results.
Promotional Environment and SG&A Pressures
Promotional activity was slightly higher year-over-year in both segments; adjusted SG&A rose by $6 million (driven by labor, rent, and advertising), although partially offset by Fuel for Growth benefits.
Strategic Exit Causes Near-Term Sales Headwind
Exit of substantially all lower-margin full-service operations in Europe will create an expected modest full-year sales headwind of approximately $10 million (not expected to be material to operating profit).
BSG Demand Behaviour and Stylist Caution
Stylists continued to buy closer to need and customers were more 'choiceful,' with some pullback in add-on services—contributing to lower transaction counts (comparable transactions down ~1% in both segments).
Company Guidance
Management raised the low end of fiscal 2026 EPS guidance after a strong Q1 and reiterated a full‑year outlook calling for consolidated net sales of $3.71–$3.77 billion (≈+50 bps FX benefit), comparable sales flat to +1%, adjusted operating earnings of $328–$342 million, adjusted diluted EPS of $2.02–$2.10 (up from a prior $2.00–$2.10 low end), capital expenditures of ≈$100 million, free cash flow of $200 million (with ~50% of FCF assumed for share repurchases), Fuel for Growth benefits of ~ $45 million in FY26 and cumulative run‑rate savings of ~$120 million by year‑end, and a roughly flat store count (≈40 openings, 40 closures, ~50 relocations); for Q2 FY26 they guided consolidated net sales of $895–$905 million (≈+100 bps FX), comparable sales +0.5% to +1.5%, adjusted operating earnings $68–$71 million, adjusted diluted EPS $0.39–$0.42, and SG&A dollars expected to be roughly consistent with Q1.Sally Beauty Financial Statement Overview
Summary
Operations are improving with a meaningful TTM revenue rebound and steady margins alongside solid operating cash flow and free cash flow, but the balance sheet is the key drag due to elevated leverage (debt-to-equity ~2.0x), which limits flexibility and raises risk.Income Statement
TTM (Trailing-Twelve-Months) revenue rebounded (+14.2%) after several years of modest declines, while profitability is steady-to-improving: gross margin is healthy (~51.6%) and EBIT margin is solid (~8.2%). Net margin remains modest (~5.3%), and recent annual results show some variability in operating profit versus prior peaks, suggesting earnings power is improving but not consistently compounding.63
Positive
Balance Sheet
Leverage remains the key constraint. Debt-to-equity is elevated (about ~2.0x in the latest periods, and materially higher in earlier years), which reduces balance-sheet flexibility for a retailer. Equity has improved versus prior years, and return on equity is strong (mid-to-high 20s% in the latest periods), but that strength is partly amplified by leverage, keeping the risk profile above average.42
Neutral
Cash Flow
Cash generation is supportive: TTM (Trailing-Twelve-Months) operating cash flow is solid (~$335M) and free cash flow is strong (~$253M) with a sharp reported improvement in free cash flow growth. However, conversion vs. earnings looks mixed, with free cash flow running below net income in the latest data, which suggests working-capital or cash timing effects that can create year-to-year volatility.58
Neutral
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.71B | 3.70B | 3.72B | 3.73B | 3.82B | 3.87B |
| Gross Profit | 1.92B | 1.91B | 1.89B | 1.89B | 1.94B | 1.95B |
| EBITDA | 403.89M | 427.73M | 393.50M | 441.06M | 493.06M | 529.70M |
| Net Income | 180.42M | 195.88M | 153.41M | 184.60M | 183.55M | 239.86M |
Balance Sheet | ||||||
| Total Assets | 2.85B | 2.87B | 2.79B | 2.73B | 2.58B | 2.85B |
| Cash, Cash Equivalents and Short-Term Investments | 157.19M | 149.16M | 107.96M | 123.00M | 70.56M | 400.96M |
| Total Debt | 1.54B | 1.56B | 1.60B | 1.68B | 1.73B | 1.94B |
| Total Liabilities | 2.03B | 2.08B | 2.16B | 2.22B | 2.28B | 2.57B |
| Stockholders Equity | 823.57M | 794.21M | 628.53M | 508.75M | 293.64M | 280.74M |
Cash Flow | ||||||
| Free Cash Flow | 216.76M | 172.69M | 145.36M | 158.57M | 57.25M | 307.96M |
| Operating Cash Flow | 334.61M | 274.83M | 246.53M | 249.31M | 156.50M | 381.86M |
| Investing Cash Flow | -117.19M | -58.28M | -108.91M | -99.78M | -102.42M | -76.02M |
| Financing Cash Flow | -168.64M | -178.42M | -153.73M | -100.82M | -373.68M | -419.97M |
Sally Beauty Technical Analysis
Positive
16.07
Price Trends
15.55
Positive
15.29
Positive
13.39
Positive
Market Momentum
0.14
Negative
52.07
Neutral
71.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBH, the sentiment is Positive. The current price of 16.07 is above the 20-day moving average (MA) of 16.03, above the 50-day MA of 15.55, and above the 200-day MA of 13.39, indicating a bullish trend. The MACD of 0.14 indicates Negative momentum. The RSI at 52.07 is Neutral, neither overbought nor oversold. The STOCH value of 71.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SBH.
Sally Beauty Risk Analysis
Sally Beauty disclosed 34 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $30.38B | 26.25 | 47.97% | ― | 5.45% | 4.28% | |
64 Neutral | $1.56B | 9.12 | 24.38% | ― | -0.42% | 31.64% | |
63 Neutral | $11.38B | 56.62 | 59.58% | ― | 9.80% | -46.84% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
57 Neutral | $1.07B | -211.84 | -0.56% | ― | -3.47% | -111.68% | |
53 Neutral | $4.66B | 7.00 | ― | 4.16% | -1.04% | -20.88% | |
48 Neutral | $418.32M | -6.22 | -13.99% | ― | 22.58% | 33.18% |
* Consumer Cyclical Sector Average
SBH
Sally Beauty
16.20
7.44
84.93%
BBWI
Bath & Body Works
22.04
-12.06
-35.37%
ULTA
Ulta Beauty
677.00
328.15
94.06%
CHWY
Chewy
27.42
-8.48
-23.62%
YSG
Yatsen Holding
4.45
0.76
20.60%
OLPX
Olaplex Holdings
1.61
0.23
16.67%
Sally Beauty Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Sally Beauty Lifts EPS Outlook After Solid Q1 Results
Positive
Feb 9, 2026
On February 9, 2026, Sally Beauty Holdings reported first-quarter fiscal 2026 results for the period ended December 31, 2025, posting consolidated net sales of $943 million, up 0.6% year on year, with flat comparable sales and e-commerce contributing 11.7% of revenue. Despite a 22% drop in GAAP diluted EPS to $0.45, adjusted diluted EPS rose 12% to $0.48, supported by gross margin expansion and $93 million in operating cash flow, which funded debt reduction, $21 million of share repurchases, and left leverage at 1.5 times, prompting the company to raise the low end of its full-year EPS outlook while keeping sales and operating earnings guidance intact.
Segment results showed modest growth at the Sally Beauty unit and slightly lower sales but improved margins at Beauty Systems Group, underscoring stable but subdued demand across its channels. Management’s reaffirmed full-year revenue and operating earnings targets, alongside disciplined capital allocation and inventory reduction, signal a focus on margin resilience and shareholder returns in a competitive beauty retail environment.
The most recent analyst rating on (SBH) stock is a Buy with a $18.50 price target. To see the full list of analyst forecasts on Sally Beauty stock, see the SBH Stock Forecast page.
Executive/Board ChangesShareholder Meetings
Sally Beauty Shareholders Approve Directors, Pay and Auditor
Positive
Jan 26, 2026
At its annual meeting of stockholders held on January 22, 2026, Sally Beauty Holdings’ shareholders elected ten directors to serve until the 2027 annual meeting, with all nominees receiving sufficient support to remain or join the board. Investors also backed the company’s executive compensation program in a non-binding advisory vote and ratified the appointment of KPMG LLP as independent auditor for the 2026 fiscal year, signaling continued shareholder support for the company’s governance practices and financial oversight framework.
The most recent analyst rating on (SBH) stock is a Buy with a $19.00 price target. To see the full list of analyst forecasts on Sally Beauty stock, see the SBH Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.