Sally Beauty Holdings, Inc. (NYSE: SBH)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0001368458
Market Cap 1.55 Bn
P/B 1.88
P/E 8.59
P/S 0.42
ROIC (Qtr) 9.55
Div Yield % 0.00
Rev 1y % (Qtr) 0.56
Total Debt (Qtr) 1.54 Bn
Debt/Equity (Qtr) 1.87
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About

Sally Beauty Holdings, Inc. (SBH) is a prominent player in the professional beauty supplies industry, with a strong brand heritage and a diverse range of products. The company operates two main business segments: Sally Beauty Supply (SBS) and Beauty Systems Group (BSG). SBS is an omni-channel retailer catering to both retail consumers and salon professionals, offering professional-quality beauty supplies at affordable prices. BSG, on the other hand, is a full-service omni-channel distributor, providing professional beauty supplies exclusively to...

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Investment thesis

Bull case

  • Operating cash flow of 334.61M provides strong 16.13x coverage of stock compensation 20.75M, indicating sustainable incentive practices.
  • Robust free cash flow of 216.76M exceeds capital expenditure of 117.85M by 1.84x, indicating strong organic growth funding capability.
  • Cash reserves of 157.19M provide ample 238.88x coverage of acquisition spending 658000, enabling strategic growth opportunities.
  • Operating cash flow of 334.61M fully covers other non-current liabilities 104.92M by 3.19x, showing strong long-term stability.
  • Operating cash flow of 334.61M provides solid 0.62x coverage of current liabilities 542.17M, showing strong operational health.

Bear case

  • Operating cash flow of 334.61M barely covers its investment activities of (117.19M), with a coverage ratio of -2.86, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 157.19M against inventory of 978.79M, the 0.16 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Free cash flow of 216.76M represents just -2.21x of debt issuance (98.11M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 923.31M provide limited buffer against comprehensive income items of (100.72M), which is -9.17x, indicating elevated exposure to market risks.
  • Operating cash flow of 334.61M is outpaced by equity issuance of (63.18M) (-5.30 ratio), indicating concerning reliance on equity markets for funding operations.

Geographical Breakdown of Revenue (2025)

Consolidation Items Breakdown of Revenue (2025)

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.04 2.23
EV to Cash from Ops. EV/CFO 8.86 14.70
EV to Debt EV to Debt 1.92 79.39
EV to EBIT EV/EBIT 9.77 -40.16
EV to EBITDA EV/EBITDA 7.38 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF 13.67 -286.14
EV to Market Cap EV to Market Cap 1.91 6.33
EV to Revenue EV/Rev 0.80 2.39
Price to Book Value [P/B] P/B 1.88 32.78
Price to Earnings [P/E] P/E 8.59 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 14.19
Dividend per Basic Share Div per Share (Qtr) 0.00 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 18.58
Interest Coverage Int. cover (Qtr) 4.93 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -150.12 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 48.95 33.75
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -2.77 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -4.69 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -3.35 29.27
EBT Growth (1y) % EBT 1y % (Qtr) 1.88 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) 6.40 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) 19.20 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.90 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.30 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.29 0.74
Current Ratio Curr Ratio (Qtr) 2.37 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 1.87 25.92
Interest Cover Ratio Int Coverage (Qtr) 4.93 4.43
Times Interest Earned Times Interest Earned (Qtr) 4.93 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.80 -42.64
EBIT Margin % EBIT Margin % (Qtr) 8.19 -131.12
EBT Margin % EBT Margin % (Qtr) 6.52 -64.70
Gross Margin % Gross Margin % (Qtr) 51.70 30.93
Net Profit Margin % Net Margin % (Qtr) 4.90 -65.71