I would like to point out that at this stage, P/E seems to edge to the long side of the trade as it has actually fallen under it's peers on top of being at nearly a 4 year low.
I would propose that given the history of being a growth trade, P/E is not as reliable a trading base as P/S is. P/S is currently twice that of LULU's peers which would give thought towards additional downside, however margins are also twice as much which would validate the higher P/S.
Basically, LULU has fallen to directly in-line with it's competition fundamentally, however the continuing revenue growth (~15% even using the low end of LULU's revised guidance) and significantly higher margins leads me to believe that the downside room here is limited and that growth will continue through the next few years.
It will be interesting to read the latest reports when they are released to say the least!
why are you using 17 as a P/E? I hold 23-28 as a fair P/E right now, rising again over the next 6 months as growth becomes the focus to investors again to 30-35.
25 or 30 is not much of a premium in a market ranging from 20-50+ P/E (it's peers, Nike to UA).
This is still a growth story as revenue continues to steam forward substantially. However, if this is truly transitioning from a growth to a value play then P/Cash flow becomes much more significant and that currently is directly in line with peers at 20.5 vs 20.3 avg.
P/E has potential to rocket forward as revenue has continued to grow with EPS lagging as additional expenses have been incurred in the short term while the company attempted to fix some of last years issues (that's my opinion based on the numbers).
I don't think you can count after-hours trading against his call. Should it open tomorrow at the same price and remain there then it was meaningful, but after hours is not a real image of the supply and demand of the shares.
Only tomorrow will tell!
I have a hard time shorting a growing company in a struggling sector below it's peers which is what would happen if this falls to the levels you are stating.
It's fallen to directly in line with it's peers on a P/B basis but is still maintaining top end revenue growth. Earnings have suffered the past year as (I imagine) a substantial amount of money has been put into fixing the problems thus leading to lower EPS.
Your right the stock was trading entirely too high and kudos for recognizing that, I hope you were able to short it all the way to the current level. I'm simply stating that there is value here.
We're trading a company, not jsut a graph on the screen, and the company is still quite sound.
with the revised guidance for fiscal Q4 2014, Revenue growth will be around 15%. Impressive growth despite the onslaught of negatives the company faced in the last year!
Additionally, store traffic seems un-phased from what I can tell.
I was in England last week and ventured to a lulu shop in Chelsea and they too were doing quite well. Thought it would be interesting to see how the international pulse was for the brand, but it seems healthy from the small viewpoint of a single store in the UK.
I am continuing to watch and buy deep in the money call options as they become cheaper and cheaper. I like the June and Jan '15 options personally!
I'm not saying it shoots straight up, but there's very little downside room here in my opinion. Good value.
Very limited downside room at 22-25 P/E. Growth is continuing regardless of what people on this board are stating.
There was a comment previously on here about being priced to perfection and lots of downside, and that was entirely accurate when the stock was priced in the $70's (around a 50 P/E ratio at that time), but with the fall the stock has sustained that is no longer accurate in any way.
People still love lulu from what I can see actually going to these stores. And for any guys out there, try on some of the Kung#$%$ pants... I love them, my favourite pants to fly in as well now!
Article seconding most of what I just said: http://seekingalpha.com/article/1960601-the-long-case-for-lululemon-athletica?source=yahoo