Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Ulta Beauty, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.5% to 2.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 8, DPO 33, DIO 100). At a 8.1% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $672.18 per share, suggesting ULTA is undervalued by 28.3% at the current price of $524.09.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,957 | 1,908 | 2,014 | 2,118 | 2,177 | 2,232 |
| (−) Net Interest | 1 | 1 | 1 | 1 | 1 | 1 |
| (+) D&A | 346 | 397 | 418 | 419 | 436 | 447 |
| EBITDA | 2,304 | 2,305 | 2,433 | 2,537 | 2,615 | 2,680 |
| (−) Tax | 472 | 460 | 486 | 511 | 525 | — |
| (−) CapEx | 428 | 417 | 440 | 463 | 476 | — |
| (−) ΔWC | 22 | -46 | 98 | 96 | 55 | — |
| Free Cash Flow (FCF) | 1,383 | 1,474 | 1,408 | 1,468 | 1,559 | — |
| Peers' EBITDA Multiple | 14.3x | |||||
| Terminal Value | 38,274 | |||||
| WACC / Discount Rate | 8.05% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,330 | 1,313 | 1,161 | 1,119 | 1,100 | 25,985 |
| Enterprise Value | 32,008 | |||||
| Projection Period | 6,023 | 18.8% | ||||
| Terminal Value | 25,985 | 81.2% | ||||
| (−) Current Net Debt | 1,758 | |||||
| Equity Value | 30,250 | |||||
| (÷) Outstanding Shares | 45M | |||||
| Fair Price | $672 | +28.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.3x | 12.3x | 14.3x | 16.3x | 18.3x |
|---|---|---|---|---|---|
| 6.1% | $557 | $646 | $735 | $824 | $913 |
| 7.1% | $533 | $618 | $703 | $787 | $872 |
| 8.1% | $510 | $591 | $672 | $753 | $834 |
| 9.1% | $489 | $566 | $643 | $721 | $798 |
| 10.1% | $468 | $542 | $616 | $690 | $763 |
Current price: $524.09. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.