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Lululemon Athletica Inc. Message Board

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  • genesis_gekko genesis_gekko Dec 12, 2010 9:59 AM Flag

    Let's have valuation discussion

    Nike's market cap is $40 billion and they just sell shoes? I look at the peg ratio of 1.7, which is below the industry avg. An RBC analyst tried to cap this stock at $35 telling all his clients to sell because the max value was baked in. Anyways, why would you short a stock with a growth profile like LULU? People have been trying to short Amazon for many years claiming it is way overvalued and have lost big time. Even Analysts have no idea where this is going.

    C.

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    • You've got to be joking - Nike?

      They just sell shoes? - right.

      Nike is a global brand, much like Coca Cola. They don't need "retail outlets" to sell their brand.

      Nike is associated with just about every sport - basketball, football, soccer, olympics, etc.

      LULU does not even have a semi-pronouncable name, let alone a "swoosh" or world known tagline - "just do it".

      You guys are really grasping for any way to argue why one would still own LULU at this stratospheric valuation.

      • 2 Replies to valufound
      • Growth potential!

      • How do you know LULU will never become a global brand?

        Secondly, Nike is still only a shoe company, and their products are over-rated and made by third world children(that's another debate). Nike, to me, is not a global brand comparable to coke or even google. As far as I know the word 'running shoe' hasn't been replaced by the word 'Nike' the way the word 'search' has been replaced by 'google'.

        Finally, You think LULU is the only company with a large valuation trading on the nasdaq? Look at Green Mountain Coffee a 4.6 billion market cap and 1 billion in sales for a coffee company?
        Explain that one to me?

        High growth companies trade at extreme premium valuations all the time. You might not like it but the market isn't guided all the time by fundamentals, just track Amazon's valuation the last five years.

 
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