Sally Beauty (SBH) Stock Trades Up, Here Is Why

What Happened?

Shares of beauty supply retailer Sally Beauty (NYSE:SBH) jumped 3% in the afternoon session after news of an insider stock purchase by a company director, signaling confidence in the beauty retailer. The move follows the disclosure of an insider purchase by Director Diana Ferguson, who acquired 2,500 shares on August 7, according to a recent SEC filing. Such transactions are often seen by the market as a strong signal of leadership's confidence in the company's future prospects. This positive development comes on the heels of Sally Beauty's strong third-quarter results, reported on August 5, where both earnings and revenue surpassed analyst expectations. Further bolstering investor sentiment, Wolverine Asset Management also disclosed it had increased its stake in the specialty retailer by 30.7% during the first quarter.

After the initial pop the shares cooled down to $11.86, up 1.4% from previous close.

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What Is The Market Telling Us

Sally Beauty’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 6 days ago when the stock gained 15% on the news that the company reported better-than-expected third-quarter earnings and raised its full-year profit outlook. The beauty products seller posted revenue of $933.3 million, which met forecasts, while its adjusted earnings of 51 cents per share comfortably beat Wall Street's expectations. Despite a minor dip in total sales, the company achieved its fourth straight quarter of operating margin growth, a sign of increased efficiency. Management also strengthened the company's financial position by repaying $21 million in debt and repurchasing $13 million of its own stock. Following the strong performance, Sally Beauty raised its full-year guidance for adjusted operating margin, signaling confidence in its ongoing strategic programs.

Sally Beauty is up 11% since the beginning of the year, but at $11.86 per share, it is still trading 16.6% below its 52-week high of $14.22 from November 2024. Investors who bought $1,000 worth of Sally Beauty’s shares 5 years ago would now be looking at an investment worth $908.43.

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