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SBH, Sally Beauty Holdings

Beauty Systems Group A leading full-service omni-channel distributor that offers professional beauty supplies exclusively to salons and licensed beauty professionals throughout the U.S. and Canada.

We operate two business segments that offer beauty products in key categories, including hair care, hair color, styling tools and nails.

Due to our long history, brand heritage, product and process-specific knowledge and training of associates, we provide unmatched hair color and care expertise to consumers.

Latest annual: FY2025 10-K

SBH · Sally Beauty Holdings

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$3.7B

−0.4% YoY · 1% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $3.7B 5-yr avg $3.8B

Gross margin 52% 5-yr avg 51%

Operating margin 8.2% 5-yr avg 9.0%

ROIC 9% 5-yr avg 18%

Owner-earnings margin 6% 5-yr avg 4%

Free cash flow margin 6% 5-yr avg 4%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What moves the needle: Gross margin has run about 50% and operating margin about 8.9% through the cycle, a solid spread between what it charges and what the product costs to make. Inventory runs near 24% of sales, so how fast it turns back into cash — and the risk of writing it down when demand softens — sits alongside the margin. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has run in the teens (median 20%, above 15% in 9 of 10 years). Owner earnings agree: roughly 5% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

18% of revenue comes from outside the United States.

Revenue by geography, FY2025

United States82%$3.0B
Other Countries18%$672M

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2016–2025

realized figures from each filing · older years to the left

2016’16	2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
											Income statement
$4.0B	$3.9B	$3.9B	$3.9B	$3.5B	$3.9B	$3.8B	$3.7B	$3.7B	$3.7B	$3.7B	RevenueRevenue
50%	50%	49%	49%	49%	50%	50%	51%	51%	52%	52%	Gross marginGross mgn
37%	37%	38%	37%	41%	39%	41%	42%	43%	43%	44%	SG&A / revenueSG&A/rev
$498M	$479M	$427M	$458M	$259M	$418M	$338M	$325M	$283M	$328M	$306M	Operating incomeOp. inc.
12.6%	12.2%	10.8%	11.8%	7.4%	10.8%	8.8%	8.7%	7.6%	8.9%	8.2%	Operating marginOp. mgn
$223M	$215M	$258M	$272M	$185M	$240M	$184M	$185M	$153M	$196M	$184M	Net incomeNet inc.
37%	38%	21%	25%	20%	26%	25%	27%	26%	26%	25%	Effective tax rateTax rate
											Cash flow & returns
$354M	$343M	$373M	$320M	$427M	$382M	$157M	$249M	$247M	$275M	$357M	Operating cash flowOp. cash
$100M	$112M	$109M	$108M	$107M	$102M	$100M	$102M	$110M	$100M	$98M	DepreciationDeprec.
$19M	$5M	($5M)	($68M)	$127M	$28M	($137M)	($54M)	($34M)	($40M)	$53M	Working capital & otherWC & other
$151M	$90M	$87M	$108M	$111M	$74M	$99M	$91M	$101M	$102M	$128M	CapexCapex
3.8%	2.3%	2.2%	2.8%	3.2%	1.9%	2.6%	2.4%	2.7%	2.8%	3.4%	Capex / revenueCapex/rev
$203M	$254M	$286M	$213M	$316M	$308M	$57M	$159M	$145M	$173M	$229M	Owner earningsOwner earn.
5.1%	6.4%	7.3%	5.5%	9.0%	7.9%	1.5%	4.3%	3.9%	4.7%	6.1%	Owner earnings marginOE mgn
$203M	$254M	$286M	$213M	$316M	$308M	$57M	$159M	$145M	$173M	$229M	Free cash flowFCF
5.1%	6.4%	7.3%	5.5%	9.0%	7.9%	1.5%	4.3%	3.9%	4.7%	6.1%	Free cash flow marginFCF mgn
$26M	—	$9M	$3M	$13M	$2M	$3M	$9M	$8M	$3M	$3M	AcquisitionsAcquis.
$209M	$347M	$167M	$47M	$61M	—	$130M	$15M	$60M	$54M	—	BuybacksBuybacks
22%	20%	23%	23%	16%	24%	19%	16%	14%	16%	9%	ROICROIC
—	—	—	—	1195%	85%	63%	36%	24%	25%	22%	Return on equityROE
—	—	—	—	n/m	85%	63%	36%	24%	25%	22%	Retained to equityRetained/eq
											Balance sheet
$87M	$64M	$77M	$71M	$514M	$401M	$71M	$123M	$108M	$149M	$157M	Cash & investmentsCash+inv
$47M	$47M	$48M	$43M	$36M	$33M	$34M	$33M	$34M	$32M	$26M	ReceivablesReceiv.
$907M	$931M	$944M	$953M	$815M	$871M	$936M	$975M	$1.0B	$988M	$987M	InventoryInvent.
$271M	$308M	$303M	$279M	$236M	$292M	$276M	$259M	$269M	$225M	$223M	Accounts payablePayables
$683M	$670M	$690M	$717M	$614M	$612M	$695M	$750M	$801M	$795M	$790M	Operating working capitalOper. WC
$1.2B	$1.1B	$1.2B	$1.2B	$1.4B	$1.4B	$1.1B	$1.2B	$1.3B	$1.3B	$1.3B	Current assetsCur. assets
$489M	$573M	$491M	$456M	$563M	$665M	$668M	$579M	$593M	$576M	$553M	Current liabilitiesCur. liab.
2.4×	2.0×	2.4×	2.6×	2.5×	2.1×	1.7×	2.1×	2.2×	2.3×	2.3×	Current ratioCurr. ratio
$533M	$538M	$536M	$531M	$540M	$541M	$526M	$533M	$538M	$541M	$539M	GoodwillGoodwill
$2.1B	$2.1B	$2.1B	$2.1B	$2.9B	$2.8B	$2.6B	$2.7B	$2.8B	$2.9B	$2.9B	Total assetsAssets
$1.8B	$1.9B	$1.8B	$1.6B	$1.8B	$1.4B	$1.1B	$1.1B	$994M	$875M	$1.8B	Total debtDebt
$1.7B	$1.8B	$1.7B	$1.5B	$1.3B	$992M	$1.0B	$955M	$886M	$726M	$1.6B	Net debt / (cash)Net debt
3.5×	3.6×	4.3×	4.8×	2.6×	4.5×	3.6×	4.5×	3.7×	5.1×	5.1×	Interest coverageInt. cov.
($276M)	($364M)	($269M)	($60M)	$15M	$281M	$294M	$509M	$629M	$794M	$838M	Shareholders’ equityEquity
0.3%	0.3%	0.3%	0.2%	0.2%	0.3%	0.3%	0.4%	0.5%	0.5%	0.6%	Stock comp / revenueSBC/rev
											Per share
149M	138M	124M	120M	115M	114M	110M	109M	107M	104M	100M	Shares out (diluted)Shares
$26.56	$28.50	$31.76	$32.23	$30.64	$33.93	$34.59	$34.10	$34.76	$35.65	$37.17	Revenue / shareRev/sh
$1.50	$1.56	$2.08	$2.26	$1.61	$2.10	$1.66	$1.69	$1.43	$1.89	$1.83	EPS (diluted)EPS
$1.36	$1.84	$2.31	$1.77	$2.76	$2.70	$0.52	$1.45	$1.36	$1.66	$2.28	Owner earnings / shareOE/sh
$1.36	$1.84	$2.31	$1.77	$2.76	$2.70	$0.52	$1.45	$1.36	$1.66	$2.28	Free cash flow / shareFCF/sh
$1.02	$0.65	$0.70	$0.90	$0.97	$0.65	$0.90	$0.83	$0.95	$0.98	$1.28	Cap. spending / shareCapex/sh
$-1.86	$-2.63	$-2.17	$-0.50	$0.13	$2.46	$2.66	$4.65	$5.88	$7.65	$8.36	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	9-yr	5-yr
Revenue / share	+3.3%/yr	+3.1%/yr
Owner earnings / share	+2.2%/yr	−9.6%/yr
EPS	+2.6%/yr	+3.2%/yr
Capital spending / share	−0.4%/yr	+0.4%/yr
Book value / share	—	+124.3%/yr

The record, charted

FY2016–2025

Each measure over its full record; the current point and the worst year marked.

Share count

104Mpeak FY2016

ROIC

16%low FY2024

Gross margin

52%low FY2020

Net debt ÷ owner earnings

4.2×peak FY2022

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$173Mowner earningsvs.$196Mnet incomelow FY2022

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2016FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business reported $196M of profit but $173M of owner earnings: $23M less than the profit line, taken out by capital spending and the timing of cash.

Reported net income$196M

Owner earnings$173M · 5% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$196M	$153M	$185M	$184M	$240M
Depreciation & amortizationnon-cash charge added back	+$100M	+$110M	+$102M	+$100M	+$102M
Stock-based compensationreal costnon-cash, but a real cost	+$19M	+$17M	+$16M	+$10M	+$12M
Working capital & othertiming of cash in and out, other non-cash items	−$40M	−$34M	−$54M	−$137M	+$28M
Cash from operations	$275M	$247M	$249M	$157M	$382M
Capital expenditurecash put back in to keep running and to grow	−$102M	−$101M	−$91M	−$99M	−$74M
Owner earnings	$173M	$145M	$159M	$57M	$308M
Owner-earnings marginowner earnings ÷ revenue	5%	4%	4%	2%	8%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $19M), owner earnings is nearer $153M.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 5.1×

Comfortable

Operating income $328M ÷ interest expense $64M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $1.6B · 5.0× operating profit

Heavy net debt

Cash $149M − debt $1.8B

What this means
Netting $149M of cash and short-term investments against $1.8B of debt leaves $1.6B owed, about 5.0× a year's operating profit (5.5× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 159d

Long (60+ days)

DSO 3 + DIO 201 − DPO 46 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 19%

High through the cycle

10-yr median, range 14%–24%; 10% latest = NOPAT $244M ÷ invested capital $2.4B

Industry peers: median 38%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 10% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 5%

Solid through the cycle

10-yr median margin, range 2%–9%; latest $173M = operating cash $275M − maintenance capex $102M

Industry peers: median 4%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 5% of revenue this year, a 5% median across 10 years. Treating stock comp as the real expense it is (less $19M of SBC) leaves $153M.
Are earnings backed by cash? 1.40×

Cash-backed

Cash from ops $275M ÷ net income $196M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 31%

Reinvests most of it

Dividends + buybacks $54M ÷ Owner Earnings $173M

What this means
Of $173M Owner Earnings, $54M (31%) went back to shareholders, $0 dividends, $54M buybacks. Net of $19M stock comp, the real buyback was about $35M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 1.02×

Maintaining

Capex $102M ÷ depreciation $100M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $3.7B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Pass

Current ratio ≥ 2× · 2.26×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $1.8B vs $725M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (10-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Miss

Uninterrupted dividends · none paid

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Miss

Earnings +33% over the record · −23%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $1.87/share (latest year $2.05), the averaged base the calculator's gate runs on, and book value is $8.32/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 10 of 10

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 9 of 10 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 12% → 8% (3-yr avg ends)

In the filing’s words The filing attributes gains to higher prices, but the margin in the record has not followed — the claim outruns the result here.

What this means
Through the cycle the operating margin slipped — about 12% early to 8% lately, median 9% — competition or costs are biting in.
Reinvestment, incremental ROIC returns capital

What this means
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
Owner earnings growth −4%/yr

What this means
Owner earnings shrank about 4% a year over the record.
Worst year 2020 · 7.4% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −3.9%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing Framed as a capability

The filing positions AI as something the company uses, not something it fears.

“The integration and use of artificial intelligence ("AI") and similar technology in our business presents risks and challenges that could adversely affect our business, reputation, and results of operations.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$1.3B

Cash & short-term investments$157M
Receivables$26M
Inventory$987M
Other current assets$122M

Current liabilities$553M

Accounts payable$223M
Other current liabilities$331M

Current ratio2.34×all current assets ÷ what's due · Graham looked for 2×

Quick ratio0.55×stricter: inventory excluded

Cash ratio0.28×strictest: cash alone against what's due

Working capital$739Mthe cushion left after near-term bills

Revenue, latest quarter vs. a year ago+2.3%the freshest read on whether the business is still growing

Current ratio, recent quarters2.1× → 2.3×

Deeper floors

Tangible book value$247Mequity stripped of goodwill & intangibles

Net current asset value($723M)Graham's net-net: current assets less all liabilities

Debt incl. operating leases$1.5B$689M of it operating leases; with finance leases, “total fixed claims” below reaches $2.5B (annual-report basis)

Deferred revenue$10Mcustomer cash collected before delivery; operating float

From the company's latest filing.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$181M

'27$161M

'28$128M

'29$94M

'30$68M

later$253M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$181Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$884Mevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$697Mthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$1.8B

Lease obligations (present value)$697M

Total fixed claims on the business$2.5B

Counting the leases the way Buffett does, the fixed claims on this business come to $2.5B, of which the leases are 28%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Sep 30, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2016–2025

Over the record, the business generated $3.1B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.

Reinvested$1.0B · 32%
Buybacks$1.1B · 35%
Retained (debt / cash)$1.0B · 33%

Returned to owners$1.1B
52% of the owner earnings the business produced over the span, $0 as dividends and $1.1B as buybacks.
Average price paid for buybacks$14.58
Across the years where the filing reports a share count, 37M shares were bought for $535M, about $14.58 each. Year to year the price paid ranged from $10.03 (2023) to $19.07 (2022); its heaviest year, 2018, paid $16.69 ($167M).
Net change in share count−32.6%
The diluted count fell from 149M to 100M, so the buybacks outran the stock issued to staff.
Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Return on what it retained−9%
Of the earnings it kept rather than paid out ($1.0B over the span), annual owner earnings (first three years vs last three) fell $89M, so each retained $1 gave back about 0.09 of yearly owner earnings. Buffett's test, run on owner earnings instead of market value.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 10-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$594M21% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equity68%goodwill is this share of book equity; the rest is the company’s own retained and paid-in capital

Cash spent acquiring$77Mover 10 years buying other businesses, against $1.0B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 10-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Chief executive	Pay, as filed	“Actually paid”	Owner earnings
2021	Christian A. Brickman	$6.7M	$5.7M	$308M
2022	Denise A. Paulonis	$8.4M	$6.3M	$57M
2023	Denise A. Paulonis	$7.2M	$2.9M	$159M
2024	Denise A. Paulonis	$7.5M	$12.8M	$145M
2025	Denise A. Paulonis	$9.1M	$12.6M	$173M

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

Insider ownership2%
The stake all directors and executive officers hold together, per the 2025 proxy: skin in the game, the first thing Munger reads.
CEO pay ratio534:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$19M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 6% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Sally Beauty Holdings is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2016–2025.

1 of the 6 tests turned up something to look into; the other 5 came back clean.

Look hereIs it less profitable than it was?4.3% vs 6.3%
The owner-earnings margin averaged 6.3% early in the record and 4.3% across the last three years, and the latest year has not recovered. Ask the filing whether that is a structural drift or a cyclical trough — price, mix, cost, or a competitor — and whether it is permanent.

And these came back clean

Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?
Are "one-time" charges a yearly habit?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

What an owner would ask, FY2025

read the 10-K →

Which reported numbers are a judgment call?
Management names Income taxes as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →

The questions the record and the charts do not answer on their own; each carries the figure and the place to look.

Peers, Specialty Retail

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
ULTAUlta Beauty Inc.	$12.4B	38%	13.4%	48%	10%
BBWIBath & Body Works	$7.3B	44%	17.3%	56%	11%
WOOFPetco Health and Wellness	$6.0B	40%	2.5%	4%	2%
SBHSally Beauty Holdings	$3.7B	50%	9.8%	20%	5%
PTRNPattern Group Inc. Series A	$2.5B	44%	3.9%	—	3%
TITNTitan Machinery Inc.	$2.4B	18%	1.9%	7%	5%
SGUStar Group L.P.	$1.8B	62%	4.1%	—	4%
LESLLeslie's	$1.2B	41%	13.1%	38%	3%
Group median	—	42%	6.9%	29%	5%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Sally Beauty Holdings has delivered.

Today’s price $

Through the cycle, Sally Beauty Holdings earns about $197M on its 5.3% median owner-earnings margin. This year’s 4.7% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($197M) Net of stock comp (−$22M) Steady-state · maintenance capex ($255M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25−3%/yr

Owner-earnings growth · ’16→’25−4%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Free cash flow $229M on 95M shares outstanding, per the 10-Q cover, as of 2026-05-06; net debt $1.6B. The if-converted diluted count is 100M, 5% above the shares outstanding: the dilution overhang (convertibles, options) a buyer inherits. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. Capex ($128M) runs well above depreciation ($98M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $255M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh SBH against another business →

Cite: Owner Scorecard, "Sally Beauty Holdings (SBH), the owner's record," https://ownerscorecard.com/c/SBH, data as of 2026-07-09.

Manual order: ← SBGI its page in the Manual SBRA →

Industry order: ← ROST the Specialty Retail chapter SCVL →