Sally Beauty (SBH) AI Stock Analysis

• Market Cap: $841.12M
• Dividend Yield: N/A
• Average Volume (3M): 2.19M
• Price to Earnings (P/E): 4.9
• Beta (1Y): 0.84
• Revenue Growth: 0.57%
• EPS Growth: 6.28%
• Country: US
• Employees: 12,000
• Sector: Consumer Cyclical
• Sector Strength: 62
• Industry: Specialty Retail
• EPS (TTM): 1.67
• Shares Outstanding: 101,954,445
• 10 Day Avg. Volume: 1,956,645
• 30 Day Avg. Volume: 2,190,664
• PEG Ratio: 0.79
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.02
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 1.35
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $13.75
• Price Target Upside: 66.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

Sally Beauty's overall stock score of 71 reflects its solid financial health and low valuation, countered by bearish technical indicators and macroeconomic challenges. The earnings call underscored consistent growth and profitability, but the flat guidance for Q2 highlights potential risks. Despite these challenges, the company's strategic initiatives and market positioning provide a stable foundation.

Positive Factors

Financial Performance

SBH has made progress in deleveraging and is now below 2x leverage, indicating strong financial discipline.

Growth Initiatives

Initiatives starting to bear fruit with significant opportunity ahead, driven by innovations and increased distribution.

Product Expansion

Sally Beauty is adding fast-growing prestige coloring brand Madison Reed to their assortment, which could attract a more premium-focused customer base.

Negative Factors

External Factors

Concerns about external factors such as tariff impact and low-end consumer pressure may affect pricing and sales.

Market Valuation

The company is currently trading below its 5-year average P/E despite its unique beauty businesses, suggesting it may be undervalued.

Sally Beauty Business Overview & Revenue Model

Company Description

Sally 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 Money

Sally 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 presents a solid financial position with consistent profitability and efficient cash flow management. While leverage remains a concern, the company is improving its equity base and maintaining stable margins. The lack of revenue growth is a notable challenge, but operational efficiencies provide some stability. Overall, Sally Beauty is navigating its competitive landscape with moderate financial health.

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.

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.

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.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement		Total Revenue
3.72B	3.73B	3.82B	3.87B	3.51B
	Gross Profit
1.89B	1.89B	1.92B	1.95B	1.72B
	EBIT
282.73M	338.65M	265.29M	320.85M	166.01M
	EBITDA
392.47M	441.06M	365.22M	423.05M	272.79M
	Net Income Common Stockholders
153.41M	184.60M	183.55M	239.86M	113.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
107.96M	123.00M	70.56M	400.96M	514.15M
	Total Assets
2.79B	2.73B	2.58B	2.85B	2.90B
	Total Debt
1.60B	1.68B	1.73B	1.94B	2.34B
	Net Debt
1.49B	1.55B	1.66B	1.54B	1.83B
	Total Liabilities
2.16B	2.22B	2.28B	2.57B	2.88B
	Stockholders Equity
628.53M	508.75M	293.64M	280.74M	15.44M
Cash Flow		Free Cash Flow
145.36M	158.57M	57.25M	307.96M	316.03M
	Operating Cash Flow
246.53M	249.31M	156.50M	381.86M	426.89M
	Investing Cash Flow
-108.91M	-99.78M	-102.42M	-76.02M	-123.78M
	Financing Cash Flow
-153.73M	-100.82M	-373.68M	-419.97M	139.76M

Sally Beauty Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 8.25
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBH, the sentiment is Neutral. The current price of 8.25 is above the 20-day moving average (MA) of 8.16, below the 50-day MA of 8.65, and below the 200-day MA of 11.20, indicating a neutral trend. The MACD of -0.19 indicates Negative momentum. The RSI at 48.36 is Neutral, neither overbought nor oversold. The STOCH value of 48.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SBH.

Sally Beauty Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LQDT	74 Outperform	$988.29M	42.26	13.48%	―	32.16%	27.32%
LZB	72 Outperform	$1.71B	14.16	12.40%	2.10%	1.81%	8.09%
SBH	71 Outperform	$841.12M	4.95	29.39%	―	0.57%	6.28%
WEYS	71 Outperform	$295.14M	9.69	12.37%	3.50%	-8.73%	0.31%
WGO	61 Neutral	$872.15M	―	-0.45%	4.07%	-12.29%	-105.55%
OLPX	61 Neutral	$912.09M	46.76	2.27%	―	-7.77%	-68.65%
Sector *	61 Neutral	$6.66B	11.71	2.96%	4.01%	2.64%	-20.91%

Sally Beauty Corporate Events

Sally Beauty Reports Strong Q1 Fiscal 2025 Results

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.