Sally Beauty (SBH) Stock Slides Ahead of Tomorrow’s Earnings Report

Sally Beauty (SBH) stock closed in the red ahead of the release of the company’s fiscal 2015 fourth quarter and full year financial results tomorrow before the market open.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Sally Beauty Holdings (SBH) - Get Report stock closed lower by 2.85% to $22.13 on heavy trading volume on Wednesday afternoon before the company reports its fiscal 2015 fourth quarter and full year financial results, expected before the market open on Thursday.

The company is expected to report unchanged quarterly earnings per share, but a year-over-year increase in quarterly revenue, and earnings per share and revenue for the full fiscal year.

Analysts have estimated earnings of 39 cents per share on $964.38 million in revenue for the latest quarter.

Last year, Sally Beauty reported earnings of 39 cents per share on revenue of $944.29 million for the fiscal 2014 fourth quarter.

Analysts expect earnings of $1.54 per share on $3.83 billion in revenue for fiscal 2015, surpassing earnings of $1.53 per share on revenue of $3.75 billion that the company reported for fiscal 2014.

The Denton, TX-based company is a beauty supplies retailer and distributor.

By the end of today's trading day, 3.68 million shares of Sally Beauty had exchanged hands, compared with its average daily volume of 2.19 million shares.

Separately, TheStreet Ratings team rates SALLY BEAUTY HOLDINGS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate SALLY BEAUTY HOLDINGS INC (SBH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • SALLY BEAUTY HOLDINGS INC's earnings per share declined by 7.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SALLY BEAUTY HOLDINGS INC increased its bottom line by earning $1.51 versus $1.48 in the prior year. This year, the market expects an improvement in earnings ($1.54 versus $1.51).
  • 49.73% is the gross profit margin for SALLY BEAUTY HOLDINGS INC which we consider to be strong. Regardless of SBH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.45% trails the industry average.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SBH has underperformed the S&P 500 Index, declining 21.63% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed compared to the Specialty Retail industry average, but is greater than that of the S&P 500. The net income has decreased by 7.8% when compared to the same quarter one year ago, dropping from $67.76 million to $62.46 million.
  • You can view the full analysis from the report here: SBH

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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