Sally Beauty Holdings: Levered Beauty

Sally Beauty (SBH), operating in the stable, low growth beauty supply industry, is holding its own during these rocky economic times. Although investors are shying away from consumer exposed names, and Sally’s leveraged capital structure makes it an easy target for elimination from any portfolio, the company still managed to beat expectations in the March quarter. The stock jumped 15%. Although it is down 33% YTD, operational improvements, steady store expansion and continued paydown of debt could bring this stock easily within reach of its 52-week high of almost $11, a potential gain of 80%.

• Price: $6.06            
• Shares Outstanding: 181
• Market Cap: $1.1 B
• Long-Term Debt: $1.8 B
• Dividend: None
• Dividend Yield: NA    
• Location: Denton, TX 

Background and Recent Corporate History