Ulta Beauty Stock: Strong Growth, Short-Term Volatility Ahead

Shakespeare once said that all that glisters may not be gold, but he clearly wasn’t talking about the impressive earnings numbers Ulta Beauty Inc. (NASDAQ: ULTA) has been reporting in 2025.

The cosmetic kingpin posted another top and bottom-line beat in its Q2 2025 earnings report released after the Aug. 28 trading session, surpassing expectations in a number of different sales categories.

Can Ulta continue to stun investors and analysts? Today, we’ll look at two factors pointing to more upside ahead, and one indicating some potential short-term turbulence.

A Dazzling Q2 Report Surpassing High Expectations

Ulta Beauty is no stranger to high expectations, and investors were rewarded when the company reported its Q1 earnings at the height of tariff turmoil. An unexpected 2.9% year-over-year (YOY) comp sales figure led the report, far surpassing the consensus figure of 0.2% from Wall Street. In Q2, analysts prepared for more upside, projecting 2.2% YOY comp sales growth. And once again, they undershot by a tremendous margin.

Ulta’s Q2 2025 earnings numbers once again blew away EPS and revenue expectations. The $5.78 EPS figure beat the consensus projection by 75 cents, and the $2.79 billion revenue number represented YOY growth of 9.3%.

Underpinning this earnings beat was another extraordinary comp sales number: 6.7% YOY growth. Usually, you need to head to Costco to see comp sales grow more than 6% in a quarter, but ULTA continues to raise the bar with sales growth across a variety of categories. 

CEO Kecia Steelman unveiled the “Ulta Beauty Unleashed” roadmap earlier this year, and the turnaround plan is already paying dividends. The comp sales growth was broad, featuring a 3.7% increase in transaction volume and 2.9% bigger tickets.

Customers are shopping more frequently and buying more when they do. A large portion of the added business is driven by Ulta’s loyalty program (growing 4% YOY to 45.8 million members) and a focus on improving the in-store experience with promotions.

Ulta’s success doesn’t rest on a single product or category, either. Fragrances continue to sell at double-digit YOY increases, with strong growth from the skincare, makeup, and haircare segments.

With numbers like this, it's easy to see why management was comfortable upping full-year sales guidance again: this time to a range of $12 to $12.1 billion, up from $11.5 to $11.7 billion.

Chart Shows Long-term Uptrend, But Short-term Headwinds

If there’s one area where Ulta Beauty is lacking shine, it’s the daily stock chart, where a few mixed signals are beginning to emerge. ULTA shares have staged a fantastic rally in 2025, gaining nearly 20% YTD and more than 40% in the last 12 months.

A Golden Cross formed following the Q1 earnings release, triggered by a 10% single-day gain as investors digested the strong report. The stock is still within a whisper of its all-time high of $555 set back in March 2024, but the uptrend is starting to lose some luster when we look under the hood.

ULTA shares have been hugging the 50-day simple moving average (SMA) as support, and the uptrend will remain in place as long as that barrier stays firm. The Moving Average Convergence Divergence (MACD) paints an uglier picture, showing momentum consistently weakening since July.

The stock lost 7% following the Q2 earnings report despite stellar numbers, only to reverse course the very next day. Technical traders will closely monitor the 50-day SMA from here for any further evidence of a breakdown.

A Full Kit of Catalysts Remains in 2025

Despite the chart's short-term volatility, Ulta Beauty still has numerous fundamental factors working in its favor. Some of these are specific to its business, but others represent sector-wide trends that should boost cosmetic retailers.

• Holiday Sales Boost - The holiday season is the busiest time of the year for retailers, and ULTA investors are anticipating more gaudy sales numbers in Q3 and Q4. Fragrances, skincare, and makeup are significant sales drivers during the holiday rush, and these divisions also provide some of Ulta’s highest-margin products. 
• Expansion into New Markets - Ulta Beauty completed its acquisition of Space NK in Q2 2025, which marks its first expansion into the U.K. The company also opened its first store in Mexico last week, and plans to add its first store in the Middle East before the end of the year.
• Strong Industry Tailwinds - It’s not just the holiday rush; ULTA has long-term tailwinds pushing its stock higher. The cosmetic industry is rapidly expanding, with sales projected to exceed $677 billion in 2025, accompanied by an expected compound annual growth rate (CAGR) of 6.64% through 2032, according to Fortune Business Insights. Sales are expanding at both ends of the age spectrum, as young customers under 24 and seniors 65 and up are increasing their purchases at a double-digit annual rate.

ULTA shares are a compelling investment case despite the recent momentum slowdown. If the 50-day SMA can hold, the uptrend could return forcefully over the holiday season. However, momentum continues to weaken, and the price breaks through the 50-day threshold; better buying opportunities could be available in the coming weeks.

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The article "Ulta Beauty Stock: Strong Growth, Short-Term Volatility Ahead" first appeared on MarketBeat.