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what it is
It sells salon-grade hair, nail, and beauty products through 4,422 stores, 131 franchised stores, and online platforms.
how it gets paid
Last year Sally Beauty made $3.7B in revenue. Sally Beauty Supply hair care was the main engine at $1.45B, or 39% of sales.
why growth slowed
Revenue fell 0.4% last year. Gross margin at 51.2% mattered most because this is a low-growth retailer.
what just happened
Latest quarter sales rose just 1%, but gross margin hit 51.2% and kept the recovery alive.
At a glance
B+ balance sheet — decent shape, but not bulletproof
55/100 earnings predictability — expect surprises
7.9x trailing p/e — the market's not buying it — or you found a deal
10.5% return on capital — nothing to write home about
xvary composite: 70/100 — average
What they do
It sells salon-grade hair, nail, and beauty products through 4,422 stores, 131 franchised stores, and online platforms.
This business wins on convenience and habit. You can buy pro beauty products through 4,422 stores, and that store density matters when your hair color ran out today. The company also serves salons through a separate distribution arm, so it sells to both your bathroom and your stylist's back room.
How they make money
$3.7B
annual revenue · their business grew -0.4% last year
Sally Beauty Supply hair care
$1.45B
Sally Beauty Supply hair color
$0.93B
Beauty Systems Group salon distribution
$0.81B
Nail care
$0.33B
Appliances and other beauty
$0.18B
The products that matter
branded beauty products
branded hair care
part of a $3.7B revenue base
this is traffic-driving merchandise inside a $3.7B business. with net margin at 5.5%, the job is not just getting shoppers in the door — it is getting them to buy enough on each trip to cover the fixed cost base.
traffic driver
owned-label hair care
label products used for hair care
supports a 51.2% gross margin
private-label mix is one reason gross margin holds above 50%. that matters more when revenue fell 0.4% from last year, because you need margin discipline when the top line is standing still.
margin support
beauty accessories category
nail care
no category breakout disclosed here
the page data is thin on segment detail, and that is worth saying out loud. in a company earning a 12.5% operating margin, smaller categories still need to earn their shelf space, but this snapshot cannot claim more than the disclosed numbers support.
detail thin
Key numbers
7.9x
trailing p/e
You are paying 7.9 times earnings for a company expected to do $4 billion in fiscal 2026 sales. That is cheap, but cheap is the market's way of billing you for risk.
12.5%
operating margin
Operating margin → profit left after running the business → so what: this retailer keeps $12.50 from every $100 before interest and taxes.
$862M
long-term debt
Debt equals 36% of capital. That is not a crisis, but it limits how aggressive management can get if sales stay soft.
$17
18-month target
The main target is $17 versus a $14.92 stock. That is only about 14% upside, so execution has to stay clean.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 25 / 100
- long-term debt $862M (36% of capital)
- net profit margin 5.5% — keeps 6 cents of every dollar in revenue
- return on equity 20% — $0.20 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in SBH 3 years ago → it's now worth $10,700.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Latest quarter sales rose just 1%, but gross margin hit 51.2% and kept the recovery alive.
Quarterly revenue was $943 million, up 1% vs. prior year. EPS was $0.45, in line with consensus, while company commentary and base research pointed to better-than-expected profitability.
$943M
revenue
$0.45
eps
51.2%
gross margin
the number that mattered
Gross margin at 51.2% mattered most because this is a low-growth retailer, so better mix and pricing do more work than a 1% sales increase.
-
sally beauty showed a solid earnings recovery over the course of fiscal 2025. (year ended september 30th.) despite an uneven top line and modest full-year sales decline, sally’s focus on earnings stabilization led to a 12% bottom-line advance over the year.
-
in the fiscal fourth quarter, sales were up just over 1%, while the gross margin also increased by 1%, leading to an earnings-per-share gain of 10%, to $0.55.
-
both top- and bottom-line results pulled ahead of our estimates.a key element of the earnings expansion during the year was operating profit growth driven by management’s cost programs, along with a favorable mix.
-
we look for a similar result in the year ahead.demand is likely to remain steady, with earnings support coming from discipline on costs, and on a share basis, from stock buybacks.
-
sales may expand about 1% in 2026, but lacking a true demand driver, the growth story would likely be mostly immaterial.sustaining the improved mix with higher-margin products could bolster the bottom line, but tariffs may also emerge as a larger problem in 2026. our outlook includes the expectation that profitability comes under greater pressure, with margins and net income taking a slight step back.
source: company earnings report, 2026
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What could go wrong
the #1 risk is store traffic and margin compression in a 5.5% net margin model.
med
sales stagnation stops the rerating
Revenue was $3.7B, down 0.4% from last year. A stock at 7.9x earnings can rerate if the business stabilizes. If sales keep treading water, the low multiple may be the right multiple.
The value case needs the path to $4B revenue to look real, not aspirational.
med
gross margin looks healthy, net margin does not
Sally Beauty keeps 51.2% of sales after product costs, yet only 5.5% remains as net profit. That gap means small operating misses hit earnings fast.
If discounting rises or store costs climb, a thin 5.5% net margin has little room to absorb it.
med
debt narrows your margin for error
Long-term debt sits at $862M, or 36% of capital. That is manageable with steady cash generation. It gets less comfortable if sales soften while financing costs stay high.
This is not distress math. It is leverage math in a business with modest growth and only average balance sheet grade.
med
the stock can stay cheap and still be rough to own
Earnings predictability is 55 / 100 and price stability is 25 / 100. In human-speak: the quarter-to-quarter ride is bumpier than the headline p/e suggests.
If you held through the move from $8 to $17, you already know the valuation story does not cancel out the volatility story.
At 5.5% net margin on $3.7B of sales with $862M of long-term debt, small operating misses matter more here than they would in a fatter-margin retailer.
source: institutional data · regulatory filings · risk analysis
Pay attention to
watch item
whether revenue gets to $4B without help from wishful thinking
That is the consensus number for fy2026. If Sally Beauty can clear it after a year at $3.7B and a 0.4% decline, the value case gets sharper fast.
margin
the gap between 51.2% gross margin and 5.5% net margin
You do not need gross margin to rise. You need more of it to survive the trip down the income statement.
ownership
whether net institutional buying keeps going
Two straight quarters of net buying and 127 buyers versus 117 sellers in 3Q2025 is helpful. If that reverses while sales stay flat, support under the stock gets thinner.
calendar
the next quarter that tests predictability
A 55 / 100 earnings predictability score means the next print matters more than usual. This is not the kind of company that gets the benefit of the doubt for free.
Analyst rankings
earnings predictability
55 / 100
in human-speak, analysts do not see this as a smooth quarter-after-quarter story.
balance sheet grade
B+
balance sheet grade is decent. you are not buying a distressed retailer, but you are not buying a fortress either.
risk rank
3
that places SBH around the market middle on risk. safer than the messiest names, less defensive than the quality compounders.
price stability
25 / 100
this is the rating version of the $8–$17 trading range. the stock does not move like a sleepy retailer.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 127 buyers vs. 117 sellers in 3q2025. total institutional holdings: 0.1B shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$9
$25
$15
current price
$17
target midpoint · +14% from current · 3-5yr high: $25 (+70% · 14% ann'l return)
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