Sally Beauty Holdings Inc. (Name to be changed from Sally Holdings Inc.) Common Stock (SBH)

FairStock Score: 59/100 — STEADY

Key Financials

Strengths

• Generates $160 million in annual free cash flow (11.3% yield on market cap)
• Strong Piotroski F-Score of 7/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• High return on equity of 24.4% demonstrating efficient capital deployment
• Established organization with 11,000 employees providing operational scale

Concerns

• Altman Z-Score of 1.6 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Sally Beauty Holdings Inc. (Name to be changed from Sally Holdings Inc.) Common Stock is a micro-cap consumer cyclical company valued at $1.4 billion. The business generates $3.7 billion in annual revenue with a 1.2% net margin and $160 million in free cash flow. From a quality standpoint, Sally shows solid Piotroski F-Score of 7/9 and distressed Altman Z-Score of 1.6 warrants caution. On valuation, the stock is deeply undervalued on a P/E basis at 8.3x, with a modest 21% margin of safety vs Graham Number. Growth dynamics show revenue growing at 0.6% and profit growth of -25.3%. Our composite FairStock Score of 59/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

The market underappreciates Sally's consistent 24% ROE at just 8x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $160 million in annual free cash flow (11.3% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the consumer cyclical space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer