Why Sally Beauty Shares Need a Touch-Up Today

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sally Beauty Holdings have fallen by 11% after the company posted disappointing earnings results for the fiscal third quarter.

So what: Sally's revenue rose 3% to $912.1 million for the quarter, but that came in below Wall Street's expectation of $927.5 million. Earnings per share were likewise underwhelming, with the $0.42 result just a penny below consensus. Same-store sales growth of 0.7% did not impress anyone, as most of the company's revenue growth came from new stores, of which 47 were added over the year-ago quarter.

Now what: Even after this drop, Sally's P/E remains elevated in the upper range of its post-crash average. Revenue is slowing down, and it appears that earnings growth is also beginning to stall after an impressive multiyear run. This stock isn't eye-poppingly expensive, but it's not quite a screaming buy after today's disappointment, either. It might be worth a closer look, but you shouldn't dive in feet-first just yet.

Want more news and updates? Add Sally Beauty Holdings to your Watchlist now.

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The article Why Sally Beauty Shares Need a Touch-Up Today originally appeared on Fool.com.

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