Ulta Salon Cosmetics & Fragrances Inc. (ULTA): Today's Featured Diversified Services Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Ulta Salon Cosmetics & Fragrances ( ULTA) pushed the Diversified Services industry lower today making it today's featured Diversified Services laggard. The industry as a whole closed the day down 0.3%. By the end of trading, Ulta Salon Cosmetics & Fragrances fell $1.21 (-1.2%) to $99.66 on average volume. Throughout the day, 648,185 shares of Ulta Salon Cosmetics & Fragrances exchanged hands as compared to its average daily volume of 843,800 shares. The stock ranged in price between $99.40-$101.35 after having opened the day at $101.35 as compared to the previous trading day's close of $100.87. Other companies within the Diversified Services industry that declined today were: Rainmaker Systems ( RMKR), down 11.3%, AMN Healthcare Services ( AHS), down 11.1%, CIBT Education Group ( MBA), down 9.2%, and Heidrick & Struggles International ( HSII), down 8.5%.
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Ulta Salon, Cosmetics & Fragrance, Inc. operates as a beauty retailer that provides prestige, mass, and salon products; and salon services in the United States. Ulta Salon Cosmetics & Fragrances has a market cap of $6.33 billion and is part of the services sector. The company has a P/E ratio of 44.7, below the average diversified services industry P/E ratio of 44.9 and above the S&P 500 P/E ratio of 17.7. Shares are up 55.4% year to date as of the close of trading on Friday. Currently there are five analysts that rate Ulta Salon Cosmetics & Fragrances a buy, no analysts rate it a sell, and four rate it a hold.

TheStreet Ratings rates Ulta Salon Cosmetics & Fragrances as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the diversified services industry could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the diversified services industry could consider ProShares Ultra Short Consumer Sers ( SCC).

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