Sally Beauty Holdings Beats on EPS but GAAP Results Lag

Sally Beauty Holdings (NYS: SBH) reported earnings on Feb. 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), Sally Beauty Holdings met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share contracted significantly.

Gross margins expanded, operating margins grew, net margins dropped.

Revenue details
Sally Beauty Holdings chalked up revenue of $864.8 million. The eight analysts polled by S&P Capital IQ looked for revenue of $856.8 million. Sales were 9.0% higher than the prior-year quarter's $793.6 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.29. The eight earnings estimates compiled by S&P Capital IQ predicted $0.27 per share on the same basis. GAAP EPS of $0.16 for Q1 were 27% lower than the prior-year quarter's $0.22 per share.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 48.8%, 100 basis points better than the prior-year quarter. Operating margin was 13.1%, 140 basis points better than the prior-year quarter. Net margin was 3.5%, 170 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $858.3 million. On the bottom line, the average EPS estimate is $0.31.

Next year's average estimate for revenue is $3.50 billion. The average EPS estimate is $1.27.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 127 members out of 139 rating the stock outperform, and 12 members rating it underperform. Among 37 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 35 give Sally Beauty Holdings a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sally Beauty Holdings is outperform, with an average price target of $22.40.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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