Cramer on Ulta Salon's Beautiful Q1 Results

Jim Cramer says that "the better the cellphone screen, the higher the resolution, the stronger Ulta's results will be."

Author:: Armie Margaret Lee
Publish date:: May 27, 2016 12:46 PM EDT

Ulta Salon, Cosmetics & Fragrance (ULTA) - Get Report is thriving in a selfie-obsessed culture.

"The resolution in this thing is so great," said TheStreet's founder Jim Cramer, holding up his iPhone, "that you can't walk out of the house without makeup 'cause you see everything."

"When I went to my daughter's graduation in Tulane, everyone was made up," Cramer said. "Why? 'Cause everybody takes pictures. There's cameras everywhere. If there's cameras everywhere, Ulta Salon is the answer."

After the market close on Thursday, Bolingbrook, Ill.-based Ulta reported first quarter earnings of $1.45 a share, surpassing Wall Street's projections of $1.29 a share. In the year-ago period, the company earned $1.04 a share.

Revenue surged 23.7% to $1.07 billion beating forecasts of $1.03 billion. Comparable sales increased 15.2%, faster than the company's expected growth of 9% to 11%.

In a Real Money article, Cramer called Ulta "one of the more amazing operators of our time."

"You do not get 15.2% comparable sales growth on top of 11.42% comps without being just about the best at what you do. When 10% of that growth is traffic, at a time when going to a brick-and-mortar store at a mall seems like yesteryear, and 3.8% is ticket, meaning you can charge more than before, you are doing something very right," he wrote.

"But the simple fact is that the better the cellphone screen, the higher the resolution, the stronger Ulta's results will be," he continued, adding that Ulta CEO Mary Dillon "just seems a lot wiser to it, although I bet if we saw the J.C. Penney ( (JCP) - Get Report ) savior's numbers--I am talking Sephora--we'd be startled, too."

In midday trading, shares of Ulta were changing hands at $231.66, up 8.4%.

"When you get 10 analysts, 10 different analysts, start their questions with "Congratulations", you know that something bigger's going on than just retail," Cramer wrote.

"You are dealing with a generational wave of strength: the desire to look good for the camera," he continued, adding that Dillon should send Apple (AAPL) - Get Report CEO Tim Cook a thank-you note.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.