Why Sally Beauty Shares Need a Touch-Up Today

Why Sally Beauty Shares Need a Touch-Up Today

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.

Tired of watching your stocks creep up year after year at a glacial pace? Motley Fool co-founder David Gardner, founder of the No. 1 growth stock newsletter in the world, has developed a unique strategy for uncovering truly wealth-changing stock picks. And he wants to share it, along with a few of his favorite growth stock superstars, WITH YOU! It's a special 100% FREE report called "6 Picks for Ultimate Growth." So stop settling for index-hugging gains... and click HERE for instant access to a whole new game plan of stock picks to help power your portfolio.

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

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.