Microsoft Corporation (MSFT) vs Ulta Beauty, Inc. (ULTA): Which Is the Better Buy in 2026?
As of 2026-06-19, MSFT is fairly valued at $379, with a DCF intrinsic value of $440 and a margin of safety of 14%. ULTA is undervalued at $456, with an intrinsic value of $636 and a margin of safety of 28%. Of the two, ULTA has the wider margin of safety.
Rewards
- ★Microsoft Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 68.3% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Microsoft Corporation scores 88/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Ulta Beauty, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Ulta Beauty, Inc. scores 77/100 on the Economic Moat Score (Wide Moat), with reinvestment efficiency as the strongest competitive dimension.
- ★Return on equity has consistently exceeded 20% over 4 years, indicating efficient use of shareholder capital.
Risks
- ⚠FCF yield of 2.5% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Insiders have sold $10.5M worth of stock in the past 3 months — significant insider liquidation.
- ⚠Beneish M-Score of -1.33 flags financial patterns consistent with potential earnings manipulation — warrants further investigation.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $379?
The market implies +12.4% Owner Earnings growth, roughly in line with history — reasonably priced.
Standard FCF implies +17.1%, reflecting ongoing growth investment.
What growth rate is the market pricing in at $456?
The market implies +6.9% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +9.2%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat driven primarily by revenue predictability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Wide moat driven primarily by reinvestment efficiency. Margin Stability is the area most vulnerable to competitive pressure.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pessimistic — investigate whether fears are temporary or structural"
"Market is pessimistic — investigate whether fears are temporary or structural"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: MSFT vs ULTA
Is Microsoft Corporation or Ulta Beauty, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, ULTA trades at a 28.3% margin of safety (intrinsic value $636 vs. price $456), compared to MSFT's 13.7% margin of safety (intrinsic $440 vs. $379).
Which stock has a wider economic moat, Microsoft Corporation or Ulta Beauty, Inc.?▼
MSFT scores 88/100 (Wide moat), while ULTA scores 77/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Which company has better free cash flow, Microsoft Corporation or Ulta Beauty, Inc.?▼
Ulta Beauty, Inc. (ULTA) generates a 5.0% free cash flow yield, compared to Microsoft Corporation's 2.5%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Microsoft Corporation or Ulta Beauty, Inc.?▼
ULTA earns 29.1% ROIC versus MSFT's 21.6%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Does Ulta Beauty, Inc. have accounting red flags?▼
ULTA's Beneish M-Score of -1.3 flags it as a likely earnings manipulator (above the -1.78 threshold). By contrast, MSFT scores -2.5, within the normal range. The Beneish model detects aggressive accounting through eight financial ratios.