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What Do Analysts Think About The Future Of Lululemon Athletica Inc.'s (NASDAQ:LULU)?

Simply Wall St

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Based on Lululemon Athletica Inc.'s (NASDAQ:LULU) earnings update on 05 May 2019, analysts seem cautiously optimistic, with earnings expected to grow by 25% in the upcoming year compared with the past 5-year average growth rate of 12%. By 2020, we can expect Lululemon Athletica’s bottom line to reach US$605m, a jump from the current trailing-twelve-month of US$484m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for Lululemon Athletica

How will Lululemon Athletica perform in the near future?

Over the next three years, it seems the consensus view of the 32 analysts covering LULU is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of LULU's earnings growth over these next few years.

NasdaqGS:LULU Past and Future Earnings, July 8th 2019

This results in an annual growth rate of 15% based on the most recent earnings level of US$484m to the final forecast of US$818m by 2022. This leads to an EPS of $6.71 in the final year of projections relative to the current EPS of $3.63. In 2022, LULU's profit margin will have expanded from 15% to 17%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Lululemon Athletica, I've compiled three important factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Lululemon Athletica worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Lululemon Athletica is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lululemon Athletica? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.