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1. Company Snapshot

1.a. Company Description

Sally Beauty Holdings, Inc.operates as a specialty retailer and distributor of professional beauty supplies.The company operates through two segments, Sally Beauty Supply and Beauty Systems Group.


The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals.This segment also provides products under third-party brands, such as Wella, Clairol, OPI, Conair, and L'Oreal, as well as exclusive-label brand merchandise.The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name.


This segment also sells products under third-party brands, such as Paul Mitchell, Wella, Matrix, Schwarzkopf, Kenra, Goldwell, Joico, and Olaplex.As of September 30, 2021, the company operated 4,777 stores, including 134 franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany.It also distributes its products through full-service/exclusive distributors, open-line distributors, direct sales, and mega-salon stores.


Sally Beauty Holdings, Inc.was founded in 1964 and is headquartered in Denton, Texas.

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1.b. Last Insights on SBH

Negative drivers behind Sally Beauty Holdings' recent stock performance include declining customer traffic, which remains a concern for the company despite its customer-centric initiatives. Additionally, the company's focus on improving gross margins through lower distribution and freight costs may not be enough to offset the decline in customer traffic. Furthermore, the company's reliance on key metrics such as comparable sales and gross profit growth may be impacted by the current market conditions.

1.c. Company Highlights

2. Sally Beauty Holdings Delivers Strong Fiscal 2025 Performance

Sally Beauty Holdings reported a robust financial performance for fiscal 2025, with Q4 and full-year results exceeding expectations. The company delivered Q4 comparable sales growth of 1.3%, 100 basis points of gross margin expansion to 52.2%, adjusted operating margin of 9.4%, and a 10% increase in adjusted diluted earnings per share to $0.55, surpassing analyst estimates of $0.49. For the full year, revenue was $3.7 billion, with positive comparable sales, gross margin north of 51%, and adjusted operating margin of 8.9%, up 40 basis points from the prior year. Adjusted diluted earnings per share was $1.9, representing 12% growth.

Publication Date: Nov -24

📋 Highlights
  • Q4 Adjusted Diluted EPS Growth:: 10% increase to $0.55, driven by 100 bps gross margin expansion to 52.2%.
  • Full-Year Revenue & EPS Growth:: $3.7B revenue with 12% adjusted diluted EPS growth ($1.90), 40 bps adjusted operating margin improvement to 8.9%.
  • Strong E-Commerce Growth:: 15% Q4 global e-commerce sales ($105M), with Sally Beauty’s e-commerce up 23% ($47M) and BSG up 8% ($58M).
  • Fuel for Growth Savings:: $46M in full-year cost savings, with $45M additional run rate savings expected in 2026 (cumulative $120M by 2026).
  • 2026 Free Cash Flow Allocation:: $200M expected, with 50% ($100M) allocated to share repurchases, supporting 10%+ adjusted diluted EPS growth through 2028.

Segment Performance

The company's core strategic pillars drove customer engagement and sales, contributing approximately 260 basis points of comp sales growth for the full year. Net sales for Sally Beauty increased 1.4% to $542 million, while BSG net sales increased 1.1% to $406 million. E-commerce sales for Sally Beauty increased 23% to $47 million, and 8% for BSG to $58 million. Gross margin in the Sally segment increased 90 basis points to 61.3%, and 100 basis points to 40% in BSG.

Growth Drivers and Initiatives

For fiscal 2026, the company will focus on four key growth drivers: understanding and activating the customer, unlocking and harvesting digital value, differentiating with product assortment and innovation, and accelerating new growth pathways. The company has provided financial targets for its three-year planning horizon ending with fiscal 2028, including net sales growth of 1% to 3%, adjusted operating earnings growth of 3% to 5%, and adjusted diluted EPS growth of at least 10%. Analysts estimate next year's revenue growth at 1.5%.

Valuation and Outlook

With a P/E Ratio of 7.51 and an EV/EBITDA of 4.9, the company's valuation appears reasonable considering its strong financial performance and growth prospects. The company's focus on digital transformation, product innovation, and customer engagement is expected to drive long-term growth. The guidance suggests the company will be on the low end of its 1% to 3% top-line growth range in 2026, but the model's resilience, with the hair color category at its core being a staple rather than discretionary, provides confidence in its long-term growth prospects.

3. NewsRoom

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Fisher Asset Management LLC Lowers Stock Position in Sally Beauty Holdings, Inc. $SBH

Dec -03

Source: defenseworld.net

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Here's Why Sally Beauty (SBH) is a Great Momentum Stock to Buy

Dec -02

Source: zacks.com

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Sally Beauty Holdings, Inc. (NYSE:SBH) Given Average Recommendation of “Hold” by Brokerages

Nov -25

Source: defenseworld.net

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Bronte Capital Management Pty Ltd. Has $11.87 Million Holdings in Sally Beauty Holdings, Inc. $SBH

Nov -20

Source: defenseworld.net

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Is Sally Beauty (SBH) Outperforming Other Retail-Wholesale Stocks This Year?

Nov -18

Source: zacks.com

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Sally Beauty Holdings, Inc. $SBH Shares Sold by Bailard Inc.

Nov -15

Source: defenseworld.net

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Sally Beauty Holdings, Inc. (SBH) Q4 2025 Earnings Call Transcript

Nov -13

Source: seekingalpha.com

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Why Sally Beauty Holdings Stock Slumped on Thursday

Nov -13

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Sally Beauty Supply

Expected Growth: 1.0%

Sally Beauty Supply's 1.0% growth is driven by increasing demand for professional beauty products, expansion of e-commerce platform, and strategic partnerships with popular beauty brands. Additionally, the company's focus on omnichannel retailing, loyalty programs, and cost savings initiatives contribute to its steady growth.

Beauty Systems Group

Expected Growth: 1.0%

Beauty Systems Group's 1.0% growth is driven by increasing demand for professional beauty products, expansion of e-commerce channels, and strategic partnerships with key suppliers. Additionally, the segment benefits from Sally Beauty's strong brand recognition, loyalty programs, and investments in digital marketing, which enhance customer engagement and retention.

7. Detailed Products

Professional Beauty Products

A wide range of professional beauty products including hair color, hair care, skincare, and nail care products

Retail Beauty Products

A variety of beauty products for retail sale to consumers, including hair care, skincare, and nail care products

Beauty Supply Products

A range of products for beauty professionals, including hair dryers, flat irons, and other styling tools

Nail Care Products

A variety of nail care products, including nail polish, nail care tools, and nail art supplies

Hair Extension and Wig Products

A range of hair extension and wig products, including human hair and synthetic hair extensions

8. Sally Beauty Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Sally Beauty Holdings, Inc. operates in a moderately competitive industry with several substitutes available, including online retailers and specialty beauty stores. However, the company's strong brand recognition and loyalty programs help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Sally Beauty Holdings, Inc. has a large customer base, but individual customers do not have significant bargaining power due to the company's diversified customer base and lack of concentration.

Bargaining Power Of Suppliers

Sally Beauty Holdings, Inc. has a moderate level of dependence on its suppliers, but the company's large scale and diversified supplier base help to mitigate the bargaining power of suppliers.

Threat Of New Entrants

The beauty industry has moderate barriers to entry, including regulatory hurdles and the need for significant capital investment. However, Sally Beauty Holdings, Inc.'s strong brand recognition and established distribution network make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The beauty industry is highly competitive, with many established players and a high level of advertising and promotional activity. Sally Beauty Holdings, Inc. faces intense competition from online retailers, specialty beauty stores, and mass merchandisers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 76.71%
Debt Cost 5.95%
Equity Weight 23.29%
Equity Cost 11.38%
WACC 7.21%
Leverage 329.35%

11. Quality Control: Sally Beauty Holdings, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sally Beauty Holdings

A-Score: 4.5/10

Value: 7.7

Growth: 3.3

Quality: 5.1

Yield: 0.0

Momentum: 8.0

Volatility: 3.0

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A-Score: 4.0/10

Value: 9.7

Growth: 1.2

Quality: 5.4

Yield: 5.0

Momentum: 1.0

Volatility: 1.7

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ThredUp

A-Score: 3.9/10

Value: 4.4

Growth: 4.9

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 1.0

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Revolve

A-Score: 3.4/10

Value: 2.7

Growth: 5.3

Quality: 6.6

Yield: 0.0

Momentum: 2.5

Volatility: 3.0

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MarineMax

A-Score: 3.3/10

Value: 8.3

Growth: 4.0

Quality: 2.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.7

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iPower

A-Score: 2.8/10

Value: 9.6

Growth: 1.6

Quality: 4.4

Yield: 0.0

Momentum: 1.0

Volatility: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.1$

Current Price

16.1$

Potential

-0.00%

Expected Cash-Flows