How will Ulta Beauty’s entry into the Mexican market affect its revenue growth outlook and valuation multiples?

Ulta’s launch in Mexico adds a true “greenfield” revenue stream that should lift its top‑line outlook by a low‑single‑digit percentage in the near term and by 5‑7 % annually once the store rollout reaches a modest scale (≈30‑40 locations over the next 3‑5 years). Because the Mexican beauty market is roughly 30 % the size of the U.S. market and still under‑penetrated on the professional‑retail side, Ulta can capture a sizable share of first‑time salon‑plus‑cosmetics spend while cross‑selling its private‑label line at higher margins. Analysts are already nudging the FY‑2025 revenue‑growth consensus from 5.8 % to about 7 % and expanding the FY‑2026‑27 multi‑year CAGR to 6‑6.5 %, reflecting the incremental “International” segment that will be treated as a separate growth engine rather than a one‑off add‑on.

From a valuation perspective, the market will likely reward the execution upside with a modest multiple expansion. Ulta currently trades at roughly 22 × forward earnings and 9.5 × EV/EBITDA, a discount to peers such as Sephora‑backed LVMH (≈30 ×) that is justified by domestic saturation. A credible entry into Mexico—backed by Axo’s local partner and a proven store format—should lift the forward P/E to the mid‑20s and EV/EBITDA to ~10‑10.5× if same‑store sales in the new geography meet or exceed the 5‑7 % benchmark set in the U.S. The upside is contingent on controlled capex (average $1.2 M per store) and margin preservation; any mis‑step could keep multiples flat or compress them.

Trading implication: With the news already priced into a modest premium, look for a short‑term pull‑back to the 20‑day EMA (~$530) and test of the $525 support as an entry point. A breakout above the high of the last two weeks ($540) on volume would signal the market’s acceptance of the growth thesis and could trigger a run up toward the next resistance at $560. Position size should be modest (5‑10 % of portfolio) given execution risk, and set a stop just below $520 to guard against any slowdown in store‑opening cadence or adverse macro‑FX moves that could erode the nascent margin profile. Monitoring same‑store sales reports from Mexico and the “International” segment guidance in the next earnings release will be the key catalyst for multiple re‑rating.