Five Below (NASDAQ:FIVE) and Ulta Beauty (NASDAQ:ULTA) Head-To-Head Comparison

Ulta Beauty (NASDAQ:ULTA) and Five Below (NASDAQ:FIVE) are both large-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Profitability

This table compares Ulta Beauty and Five Below’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ulta Beauty	9.34%	45.40%	17.37%
Five Below	11.65%	22.13%	9.86%

Volatility and Risk

Ulta Beauty has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Five Below has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500.

Valuation and Earnings

This table compares Ulta Beauty and Five Below”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ulta Beauty	$12.39 billion	2.25	$1.15 billion	$27.44	23.71
Five Below	$4.76 billion	2.88	$358.64 million	$11.14	22.34

Ulta Beauty has higher revenue and earnings than Five Below. Five Below is trading at a lower price-to-earnings ratio than Ulta Beauty, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

90.4% of Ulta Beauty shares are held by institutional investors. 0.2% of Ulta Beauty shares are held by company insiders. Comparatively, 1.0% of Five Below shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Ulta Beauty and Five Below, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ulta Beauty	0	8	23	1	2.78
Five Below	0	13	19	0	2.59

Ulta Beauty presently has a consensus price target of $635.87, suggesting a potential downside of 2.28%. Five Below has a consensus price target of $300.45, suggesting a potential upside of 20.75%. Given Five Below’s higher possible upside, analysts plainly believe Five Below is more favorable than Ulta Beauty.

Summary

Ulta Beauty beats Five Below on 10 of the 15 factors compared between the two stocks.

About Ulta Beauty

Ulta Beauty, Inc. is a specialty beauty retailer offering cosmetics, skincare, fragrance, haircare and related products. Its assortment includes both mass-market and prestige brands, as well as products sold under its own private-label brands. The company serves customers primarily through its retail stores across the United States and its e-commerce channels. Many stores also offer salon services, including haircuts, styling and hair color, alongside beauty products and services. Founded in 1990, Ulta Beauty is headquartered in Bolingbrook, Illinois.

About Five Below

Five Below, Inc. is a U.S. discount retailer offering a changing assortment of value-priced products for teens, tweens, and families. Its merchandise spans toys and games, technology accessories, sports and recreation, fashion and accessories, home goods, party supplies, seasonal items, and candy. The company was founded in 2002 by David Schlessinger and Tom Vellios, and opened its first store in Wayne, Pennsylvania. While its name reflects its original focus on products priced at $5 or less, Five Below has expanded its assortment to include higher-priced items through its Five Beyond offering.