Why Sally Beauty Holdings (SBH) Spiked on Thursday

NEW YORK (TheStreet) -- Sally Beauty Holdings (SBH) was trading higher on Thursday after reporting higher-than-expected revenue on increased customer traffic.

By midafternoon, shares had climbed 6.8% to $29.84.

In its first quarter ended December, the beauty product retailer reported total sales 3.9% higher year-over-year to $940.5 million. Analysts had expected $933.4 million in revenue. Same-store sales grew 2.2%.

"The improvement was primarily due to an increase in traffic which gives me confidence that the return to our targeted marketing campaign and the introduction of new brands in our Sally U.S. business will continue to improve traffic results throughout the fiscal year," said CEO Gary Winterhalter in a statement.

However, profitability took a hit on climbing expenses. Net earnings of $58 million, or 35 cents a share, dropped 1.7% year-over-year. Analysts had expected net earnings of 36 cents a share. Selling, general and administrative expenses increased 4.5% to $319.5 million, a result of new store openings.

TheStreet Ratings team rates SALLY BEAUTY HOLDINGS INC as a Buy with a ratings score of B-. The team has this to say about their recommendation:

"We rate SALLY BEAUTY HOLDINGS INC (SBH) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, good cash flow from operations, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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